# Pre-Calculus Finance Project

### Created By: Sandon Scott (Mrs. Colwell, Hour 6)

## Scenario #2 (Monthly Amount That Can Be Afforded)

**$900-$1150**. Many financial advisors recommend that a person's mortgage payment be equal to about 28% of their net monthly income. This is mainly because there are so many other expenses that people need to take into account. It is important for people to have a sufficient amount of money each month to set aside for retirement funds, insurance, food payments, and other miscellaneous expenses.

## Scenario #2 (Total Amount That Can Be Afforded)

**$1000**per month was an appropriate mortgage payment for Harper to make). After entering that information, the calculator figured that Harper could take out a loan of around

**$194,794.40**.

## Scenario #2 (Minimum Payment That Can Be Made)

**$650**per month. If she were to make this mortgage payment, her loan would be around

**$126,616.36**(with an APR of 4.612% and a 30 year-fixed loan). It is very difficult to find homes in this area for lower than that amount, so that would be the cheapest payment she could make to live in the area.

## Harper's Home ($194,900.00)

Overland Park, KS

Listing Link: http://www.reeceandnichols.com/homes-for-sale/KS/Overland-Park/66223/7353-W-157th-Terrace-93594976

## Scenario #2 (Monthly Payment Increased By 15%)

**she would save around $44,429.80 and 7 years 1.5 months worth of time**. I found that information through the following calculations: If Harper made the $1000.54 payment consistently and kept her loan at a 30 year-fixed rate, she would pay a total of $360,194.40 (1000.54 * 360). If Harper increased her payment to $1150.62, this would reduce amount of payments she would make to 274.43 (I entered a PV value of 194900, a PMT value of -1150.62, an I% value of 4.612, and solved for the N value on the finance application in my calculator). If she made 274.43 payments of $1150.62, she would be paying a total amount of $315,764.40 (274.43 * 1150.62). To calculate the amount of money she saved, I subtracted $315,764.40 from $360,194.40. I figured that she saved about 7 years and 1.5 months worth of time by subtracting 274.43 from 360, then dividing that amount by 12.

## First Year Amortization Table

2014: Jan Feb

Principle: $251.48 $252.44

Interest: $749.07 $748.10

Balance: $194,648.52 $194,396.08

2014: Mar Apr May

Principle: $253.41 $254.39 $255.36

Interest: $747.13 $746.15 $745.18

Balance: $194,142.67 $193,888.28 $193,632.92

2014 June July

Principle: $256.35 $257.33

Interest: $744.20 $743.21

Balance: $193,376.57 $193,119.24

2014 Aug Sept Oct

Principle: $258.32 $259.31 $260.31

Interest: $742.22 $741.23 $740.23

Balance: $192,860.92 $192,601.60 $192,341.29

2014: Nov Dec

Principle: $261.31 $262.31

Interest: $739.23 $738.23

Balance: $192,079.98 $191,817.67

## References

*Reece & nichols*. (2013, JULY 11). Retrieved from http://www.reeceandnichols.com/homes-for-sale/KS/Overland-Park/66223/7353-W-157th-Terrace-93594976

*Mortgage: Buy a home*. (2013, DEC 17). Retrieved from https://www.bankofamerica.com/home-loans/mortgage/overview.go

*How is an amortization schedule calculated?*. (2013). Retrieved from http://www.myamortizationchart.com/articles/how-is-an-amortization-schedule-calculated/