Jenny's Home
Pre-Calc. Project (Scenario 3)
Annual Salary
30 % of Jenny's Salary goes to taxes. So, without including tax, her monthly pay would be $ 2,333.33. She has a car payment each month too. So, minus her car payment she would have $ 2,103.33 for her monthly pay.
College Loan
With a 6.8% of Interest rate, in ten years, Jenny can pay off her 20,000 loan, if she pays 230.16 dollars each month.
Money She can spend on house
If Jenny pays $ 230.16 for the college Loan. Her monthly payment that she can use for her other expenses would be $ 1,873.17. If she needs a very comfortable payment for her house, she can use $ 500 each month for her house payment.
Down Payment
Since Jenny doesn't have any savings, her down payment needs to be affordable in her monthly pay that she has left. With her down payment being 1% she can afford a $ 1000 for the first month.
Interest Rate
According to the information from the website of Bank of America, on 12/29/13, the interest rate for a 30 years loan is 4.625%.
Present Value
Since Jenny paid her 1% down payment, she only has $91,080 of her house loan left to pay.
Payment Per Month
With a 30 years loan, on a 4.625% interest rate, Jenny's monthly payment will be $468.28.
15 % more per month
If Jenny decides to pay 15% more each month, she would pay $538.52 instead of paying $468.28.
Profit
If she pays $538,52 each month, she can finish paying her house loan in less than 30 years. Therefore, by increasing her monthly payment by 15%, she can save $ 19,949.28 and 7 years.
Cited in APA Format
(2013, December 29). Reece and Nichols. Retrieved from http://www.reeceandnichols.com/homes-for-sale/KS/Olathe/66062/16501-W-126TH-Terrace-101739296#_
Torres, M. (2011). Purchase Your Home for 1% Down. Retrieved from http://onepercentdown.weebly.com/
(2013), Bank of America. Retrieved from https://www.bankofamerica.com/home-loans/mortgage/overview.go