# Harper's Future Humble Abode

## 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.

## She Found the House!

Harper was absolutely elated to find this gorgeous home that would soon be hers, but first she need to crunch down with some numbers to figure out just how well of a bargain she was getting.

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

One of Harper's financial advisers suggested that she increase her monthly payment by 15%. It was something that she could easily afford, and he told her of how it would save her both time and money on her mortgage. So, she wanted to test this theory.

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

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