# Harper's Future Humble Abode

### Pre-Calc Finance Project (Scenario 2) Hr. 7 Colwell

## Harper's Current Finances

**Annual Income:**

- Gross Annual Income- $70,000
- Net Annual Income after 30% Tax Reduction- $49,000
- Net Annual Income after $325 monthly car payment- $45,100
- Net Annual Income after Student Loan Payment (equation shown in picture #1)- $40,266.64
- Total Net Annual Income: $40, 266.64

**Monthly Income:**

The monthly income was determined to be $3,355.55. From this income, Harper has decided to factor out an additional $500 for miscellaneous expenses. This left her with $2,855.55 each month.

__Borrowing Limit:__

Harper took a visit to Bank of America, and she was told that she would receive a 4.625% fixed interest rate with a 30 year mortgage. With this information she was able determine her maximum borrowing amount to be $555,403.72. The formula used to determine this value is shown in picture #2.

## #1-Student Loan Annuity This equation was used in order to calculate the R value or monthly value needed to pay Harper's student loan within 10 years. | ## #2-Borrowing Limit With the given equation, the PV is equal to $555,403.72 This is the maximum value that Harper can borrow when considering buying her new home. | ## #3-Monthly House Payment |

## #1-Student Loan Annuity

## #2-Borrowing Limit

## She Found the House!

Because she wants to purchase her new house in the next few months, she decided to save 8 months of her income as a down payment of $22,844.40 on her $450,000 home. This caused her to take a loan for $427,155.60. With this value, her monthly payment came out to be $2,196.18. The equation needed to to determine the value is shown in picture #3.

## Possible Savings

First, the current monthly payment was multiplied by by 1.15 (2,196.18 x 1.15=2,525.61). After plugging the new value into the PV equation (equation shown in picture number 4), the new n value is approximately 274.29. Divide this by 12, and the mortgage comes to be only 22.86 years. That is over 7 years of time saved. Likewise, the evaded seven year period results in a savings of $97,875.23! So, will she listen to her adviser? Only Harper can tell. Nonetheless, more photos of her beautiful new home can be seen below.

## Works Cited

*Large Front Entrance*[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Deck *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Rear Entrance *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Family Room *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Formal Living Room *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Office *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905

Aubuchon, S. (2013, September 29). *Small Front Entrance *[Monograph]. Retrieved from http://reeceandnichols3.reachlocal.net/homes-for-sale/KS/Leawood/66209/12829-Catalina-Street-98494905