Modern Townhouse in Lenexa

Pre-Calc Finance Project Scenario 2 Hour 2

Total Funds Available After Car Payments, Student Loans and Taxes

$70,000 x .3 = $21,000

$70,000-$21,000 = $49,000

$49,000/12 = $4083.33 per month

$4083.33 - $325 -$473.7 = $3284.63-net monthly income

An interest rate for a 30 year fixed loan would be 4.875% each month according to Bank of America, taking into account a 20% down payment of the $85,000 cost of the home, which is $17,000

Cost Rational

For this house including all major expenses the amount that Harper can afford is about $350- 400 per month. This is because once homeowners insurance is paid ($101), home warranty is paid ($74.92), home security is paid ($37) and Homeowners Associations dues are paid ($131) Harper will still have $2940.71 to spend on house payments per month and other expenses. Also, Harper will have her student loans paid off in 8 years so she will not have to worry about that in 8 years giving her $473.70 more to spend a month. Her monthly cost for this home would be $359.86, with a 30 years fixed loan with an interest rate of 4.785%. It would make sense for her to have this much because of her income without living in a house.

Borrowing Rational

If Harper borrowed $68,000 from the bank she would be able to pay it off after 30 years with a $359.86 monthly cost. Though she is borrowing close to what she makes in a year without taxes, the amount of money left over, $2580.85 per month, she can pay for other expenses and put away a steady amount of money to cover her house payments if she has a financial problem in the future. She will also have to pay monthly taxes of $130.42 for her house, which will still leave her a large amount of money to save, invest and spend-$2450.43

Payment Increase by 15% Effects

$359.86 x .15 = $53.98

$53.98 + $359.86 = $413.84 monthly payments

$413.84 x 22.66 x 12 = $112,419.64 (22.66 is equal to 22 years and 8 months)

$359.86 x 360 = $129,549.60

$129549.60-$112419.64 = $17,129.96

So Harper will save $17,129.96 if she increased her monthly payments by 15%

She would also pay off her home around 8 years earlier than she would have in a 30 years fixed loan.

A Look At The Town House

The townhouse has two bedrooms, and 1 full bath and two half baths. Two bedrooms are smart to have even though Harper is living by herself because she might have out-of-state relatives who might visit and need a place to stay. Through buying this house Harper has access to tennis courts and a swimming pool.