New House

Hour 7 Pre-Calc Finance Project

Monthly Payments

I can pay 500 dollars per month for my house. I estimated that about 18,000 dollars would be spent towards heating, food, clothes, and insurance per year. I would be bringing home 28,000 after taxes and I would have to subtract the car and student loan payments which comes to 24,549 dollars per year. Subtract 18,000 from the 24,549 and you get 6,549 dollars. When you divide 6,549 dollars by 12 months it equals 545. The extra 45 dollars not being spent per month would go into a savings account. This is my reasoning behind my monthly payments.

Bank Loan

I could afford to get a 30 year fixed rate mortgage for 74,900 dollars from Bank Of America. The house cost 79,900 dollars and I would make a 5,000 dollar down payment. The interest rate would be 4.75% and I would have to pay A minimum of at least 391 dollars each month. If I were to pay 15% more than my minimum monthly payment required I would be paying 449.65 dollars per month. This would cut off 1 year and 2 and a half months of payments. I would save 11,235 dollars from paying 449.65 dollars per month. By paying 15% more each month the bank will not be able to take 4.75% of the money I am depositing as often because I will be able to pay off my loan in a shorter period.