Brent's New Pad
Joseph Price, Hour 2 Stein: Scenario 1
In Scenario 1, Brent is making $60,000 a year, but with 30 percent of that money going to taxes he truly makes $42,000 a year, which is $3500 a month. Then subtract $450 from that for Brent's car payment, and he has $3050 a month. Then subtract $1500 for necessities like food, gas, bills, and clothing and that brings his monthly income to $1550. So realistically, Brent has $1550 that he can afford to pay each month for his house.
This equation shows how much Brent can afford in a house, which is $557,676 when using the average rate of 4.625 percent.
To find the minimum monthly payment, this equation was used. The payment was found to be $500.29, which is well within Brent's budget.
In the upper left picture, the principle is increased by 15 percent or $75.04. X or N is then solved for and divided by 12 to take out the monthly payment to find the amount of time the loan would be paid off in. I found the number of years to be 26.06. So by increasing the monthly payment by 15 percent, 3.94 years would be shaved off. The through the other equations it can be seen that $194.49 would be saved just by making a little bit higher monthly payment.
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Williams, K. (2013, December 3). Remax. Retrieved from http://www.remax-midstates.com/Home/6241-W-122nd-Street-Overland-Park-KS-66209/HRT/1802845/.