Finding an Affordable Home

Honors Pre-Calculus Finance Project

Affordable Monthly Income: $2,145.55

After factoring in the following deductions of 30% for taxes, $325 per month for car payment, $402.78 per month for student loans on a 10 year fixed interest rate of 6.8%, and roughly $940 for monthly expenses, I was left with $2,145.55 as my fitting monthly payment.

Housing Limits and Rates

Minimum Monthly Mortgage Payment

The house that I am purchasing costs $158,250 and with a 4.6% interest rate on the mortgage loan for 30 years, my monthly mortgage payment adds up to be $811.26, an affordable amount for my budget. However, this payment is not idealistic since I have up to $1,207.78 per month to comfortably pay off this mortgage loan. A higher payment per month would help me save money and help pay my house off faster in the long run.

Increasing the Monthly Payment by 15%

New Monthly Mortgage Payment: $932.95

By increasing my original monthly mortgage payment by 15%, my new payment becomes $932.95 per month. This not only saves me $35,902.80 in the long run, it also cuts off 7.12 years out of the original 30 years to pay off my mortgage. This would be the smarter payment to choose since my budget still allows me to afford this higher monthly mortgage payment comfortably.

References

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