Harper's House Purchase- Scenario 2

By Connor Leimer hr.5 Stein

Harper's Income

Harper's annual salary=$70,000

Annual salary after (30%) income tax=$49,000


Monthly salary after taxes= $4083.3


Work Shown:

70,000 x 0.7= 49,000


49,000/12 = 4,083.3

Monthly Expenses

Car payment of $325 a month

Student loan (10 year term at 6.8%) of $402.78 a month

Food ($100/week x 52 weeks/12) at $433.33 a month

Utilities at $150 a month

Insurance of $100 a month

Gas for car $200 a month

Miscellaneous expense $200 a month


Total monthly expense of $1,811.11


Monthly salary after expenses and taxes= $2,272.22



Work Shown

13,000/12=1,083.33

3,900/12= $325 (car payment)


325+402.78+433.33+150+100+200+200=1,811.11


(monthly salary after tax and expenses)

$4,083.33-$1,811.11= $2,272.22



House Purchase

House Cost= $119,950


10% downpayment of $12,000

(Saved monthly income of $2,000 for 6 months)


House is now $107,955


Minimum Monthly Payment of $545 for 30 years (at 4.48%)


Total payment is

$545 (monthly payment) X 12 months X 30 years = $196,200


Work Shown


119,950- 12,000=107,955

Maximum Loan

Because Harper's monthly budget is $2,272, she can afford a monthly payment of $2,272 which would allow a loan of $400,000. Even tho she can technically afford a loan of $400,000 that doesn't mean she should take it. It would be better to borrow around $200,000 and have some extra money in her monthly budget for savings.

At $200,000 she would pay around $1,010 a month. This is the most practical loan because if it was any higher she would barely have $1,000 dollars to live on after expenses and payments. She needs to have money for unexpected expenses or emergences. She also couldn't invest in a retirement or savings account. Just because you can afford a loan doesn't mean you should take it. We have to factor in the fact that people save and invest money and may need money for miscellaneous expenses.


$1,262 remaining for investments, savings or extra expenses.


Work Shown

$4083-$1,811= $2,272


$2,272- $1,010= $1262



Minimum Payment Increased by 15%

New monthly payment of $626.75 (15% increased)


Minimum payment

$545 (monthly payment) X 12 months X 30 years = $196,200


New Payment increased by 15%

$626.75 (monthly payment) x12 months x 23 years= $172,776



Time Saved= 7 years


Money Saved= $23,424




Work Shown

$545 x 1.15 = 626.75 (15 percent of the minimum payment)


30 years-23 years= 7 years


$196,200- $172,776= $23,424



Reference Slide in APA

Image: unknown, (2013, December 21). House for Sale [Monograph]. Retrieved from http://www.zillow.com/homedetails/821-E-Northview-St-Olathe-KS-66061/75606875_zpid/.


Website: Unknown. (2013, December 21). Zillow. Retrieved from http://www.zillow.com.