# Finance Project

## Monthly Income

Brent, a construction foreman, was looking for a home in Kansas. He earns an annual salary of \$50,000 before taxes. But he must make sure he leaves enough of his monthly income for necessities, food, and a \$23,000 car with a 6.5% 5 year car loan that he just purchased.

Monthly Salary

Before Tax: \$4, 166.67

After Tax: \$4, 166.67- \$1,250= \$2,916.67

Monthly Car Loans

Rate = \$450.02

Monthly Living Cost

Car Insurance: \$60.00

Food: \$250.00

Utilities: \$200.00

Entertainment: \$190.00

Car Payment: \$450.02

Total Monthly Expenses: \$1,150.02

Budget For House

\$2,916.67- \$1,150.02= \$1766.65

• This is the maximum monthly budget that can be afforded for a house.

## What Can I Afford

Mortgage Interest Rate= 4.163%

Present Value= \$362,866.07

## Chosen Home:

Brent found a home in Overbrook Road, Leawood, KS.

Total House Price= 299,000

## Actual Monthly Payment

Brent has a monthly payment for the house mortgage that fits under his budget.

Interest Rate: 4.163 %

Minimum Payment Each Month: \$1455.71

Total Amount of Money Spent: (360 payments) * (\$1455.00) = \$523,800

Money spent in Interest: \$224,800.00

## First Year Amortization:

Brent will follow his monthly payments for 30 years until he pays back all of his borrowed money. The first year he will have spent a total of \$17,460.00 if he follows through with his monthly payments. After the first year, he will still owe the bank \$506,340.00, and he has only paid about 3% of his mortgage off after the first year.

## Increased Principle

If Brent increased his monthly payment by 15%, he could save thousands of dollars and years on his house mortgage. The increased monthly payment would allow Brent to finish paying for his mortgage in 24 years rather than 30 years.

Increased Monthly payment: \$1,674.07

Time Saved: (30 years)(12 monthly payments) - (24 years)(12 monthly payments)

TIME SAVED: 6 years

Total Amount of Money Spent: (280 payments) * (\$1674.07) = \$468,720

MONEY SAVED: \$55,080

## APA Website Citations

Zillow: Real Estate, Apartments, Mortgages & Home Values. (n.d.). Retrieved February 05, 2016, from http://www.zillow.com/Home.htm?d=false

Bank of America — Banking, Credit Cards, Mortgages and Auto Loans. (n.d.). Retrieved February 05, 2016, from https://www.bankofamerica.com/