# Jenny Is Buying a House

## Jenny's Finances

Jenny in her two years attending college managed to rack up \$20,000 dollars in student loans which she plans to pay off over a period of ten years with monthly payments about \$230.16 a month. Jenny is currently employed as a bank teller where she makes \$40,000 a year before taxes, her monthly untaxed income is roughly \$3,333.33. Jenny has a car and she pays \$230 a month in order to pay for the car. Although a life without taxes would be great, Jenny cant get by with out paying \$12,000 or 30% of her salary to taxes. After she pays taxes, she is left with roughly \$28,000 annual salary or \$2,333.33. If Jenny on average spends \$283.86 a month of food and roughly \$200 a month on gas those total up to \$483.86 a month. After subtracting the student loans, gas, food, and car payments Jenny is left \$1,389.31 a month that she could use in order to buy a house. And in a more realistic mind set, assuming that she saved \$300 a month, she would be left with \$1,089.31 in order to spend on a house, utilities, and discretionary spending.

With the equation above, you are able to find out the minimum payment that Jenny must pay in order to not default on her loan. With this equation, I found that jenny must pay at least \$319.28 a month, which leaves her with plenty of money in order to pay for utilities along with possibly starting to save for retirement or start a sinking fund in order to be able to put a down payment on her next house.

The equation above is used in order to find the maximum price of a house that she is able to afford, which is \$211,870.51. But because she is a single woman and there are houses that will suit her needs that are much cheaper and in the long run would be better for her, is why i looked into buying her a \$62,100 house.

If Jenny was to increase her monthly payment by 15% the would be paying \$362.17 a month. By increasing her monthly payment by 15%, it takes off nearly 12 years of her mortgage and makes her only have to pay for 18.83 years. Which also saves her a lot amount of money as well as time.