Finance Project

By Chandler McKee

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

Amortization Table

Big image

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