Jenny's Monthly Finances
Scenario
Jenny went to college for two years, and then dropped out. Unfortunately, by the time she dropped out of college, she had $20,000 in student loans with an interest rate of 6.80%. She has been working as a bank teller for the last three years. Her salary is $30,000. She also has a car payment of $400 per month. She is excited to buy her first home.
Monthly Budget
With an income of $2,500/month and after the expenses listed above, she will have $1,119.84 leftover for a monthly house payment. After the monthly house payment she will deposit the leftover money into a savings account.
House: 8613 Floyd St. Overland Park, Kansas 66212
Zillow.com states that the estimated mortgage would be $571.00/month, however, with a 30 year loan of $135.000.00, 12 payments/year, and an APR 4.32% on February 15th, 2016 with Sebonic Financial through the Zillow Mortgage Rate system. The monthly payment would be $669.66 plus $285.00/month for home insurance. The total home payment/month would be $954.66. So now let's figure this into the monthly budget.
Monthly Budget with Home Payment
So after the monthly house payment of $954.66, the amount of money deposited into a savings account would be $165.18/month and 1982.16/year.
Amortization Table
Once the mortgage has been approved, Jenny must pay a minimum of $954.66.
15% Increase in Monthly Payment
If Jenny were to increase her monthly payment by 15% from $954.66 to 1097.86, she would pay off her loan in about 13 years and 6 months. She would also save around $165,165.56, if it were possible with her budget I would definitely recommend paying back the loan faster than the original plan proposed.