# Finance Project

## Scenario 3

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.

## Income

\$30,000 annual income

\$21,000 net annual income (includes 30% taxes)

\$1,750 is Jenny's net monthly income

## Student Loan

\$20,000 loan

6.8% interest rate

10 year pay off

= \$230.16/month

## Monthly Budget Breakdown

Car insurance:\$60

Food: \$150

Utilities: \$200

Cell phone: \$60

Gas: \$1.55/gallon = \$50

Entertainment/Other: \$150

Student loan: \$230.16

Car payment: \$400

Total monthly expenses= \$1,300.16

\$1,750.00 - \$1,300.16 = \$449.84 left per month

## House Budget

\$449.84 max budget/month

Condo for Sale (found on Zillow):

Cost: \$85,000

30 year interest rate: 3.75% (found on Bank of America)

Address: 12625 W. 110th Ter, Overland Park, KS 66210

Features: 2 beds & 1 bath, walking distance to shops & groceries, deck, fireplace

Total monthly payment= \$393.65

\$449.84 - \$393.65 = \$56.19 left per month

Over the course of the loan…

(393.65)(12)(30) = 141,714 - 85,000 = \$56,714 payed in interest

## Increased Principle

Monthly house payment increase of 15% = \$393.65 + \$393.65(.15) = \$452.70

With a 15% increase, it would take Jenny 23.6 years to pay off mortgage.

(N= 283.23/12 = 23.60 years)

Difference in total amount paid…

(\$452.70)(12)(23.60) = \$128,204.64

\$141,714 - \$128,2014.64 = \$13,509.36

## References

Mortgage:

Home Mortgage Loans from Bank of America. (n.d.). Retrieved February 5, 2016, from https://www.bankofamerica.com/home-loans/mortgage/overview.go

Real Estate: