Arrowhead Acres

Precalculus: Finance Project - Scenario Two

Net Monthly Income

Harper makes $49,000 annually (including 30% taxes); $4083.33 monthly, but has a car payment of $325 a month, $2453.37 a month for student loans, and $900 in basic expenses. In the end, Harper has $404.96 left to spend on house payments per month.

Bank of America Home Loan

Harper must buy a house in which the monthly payment can be no more than $404.96. The home she wants costs $94,900, so she will need to get a home loan for $76,000 ($19,000 down payment), which comes with a 30 year fixed loan and an interest rate of 4.5%. Therefore, she will have a home payment of $385 per month.

115% Monthly Payment

If Harper was to increase her monthly payment by 15%, her new payment would be $442.75 per month. By doing so she would save $9,836.43 over a period of 14.3 years.