Harper's Dream Home
Pre-Calculus Mrs. Colwell Hour 3
The House - $315,000 (11928 Haskins Street Overland Park, KS 66213)
Amount That Can Be Afforded Each Month: $1630.55
- Subtract $402.78 Monthly for Student Loans (Paid back in 10 years)
- Subtract $325 for the Car Payment
- Subtract $500 for Savings
- Subtract $300 for Food/Nutrition
- Subtract $375 for Phone/Internet/Cable/Utilities
- Subtract $250 for Entertainment
- Subtract $300 for Gas/Car Insurance
After the aforesaid deductions, Harper is then left with $1630.55 to spend per month for a house mortgage.
Amount That Can Be Borrowed: $317,141.54
Final Mortgage Financing
Minimum Monthly Mortgage Payment After Approval - $1619.64
Justification: The aforesaid information was calculated using the present value of an annuity equation, using the home list price of $315,000, the approved interest rate (from Bank of America) of 4.625, and the 30 payment deadline. The calculated value of $1619.64 is under the determined affordable monthly payment (seen above) and would be a great deal for this home.
- Her New Mortgage Monthly Payment: $1862.59
- Her New Time to Finish Mortgage (In Years): 22.85 years
- Time Saved: 85.74 Months or 7.145 Years
- Amount of Money Saved: $72,349.32
Justification: The aforesaid information can be calculated using the Present Value of an Annuity equation, with an augmented monthly mortgage payment which is determined by increasing the minimum payment of $1619.64 by 15%. This calculation yields a value of $1862.59, which is then used with the fixed interest rate of 4.625% and the list price of $315,000 to find the new amount of time needed to pay off the loan. Next, the number of years needed to pay off the loan with and without the 15% increase can be multiplied by the each respective monthly payment with and without the 15% increase to find the amount saved.
No Author. (2014.January 1). Mortgages - Bank of America. Retrieved from https://www.bankofamerica.com/home-loans/mortgage/overview.go
Gunderson, D. (2014. January 1). REMAX Realty Suburban. Retrieved from http://firstname.lastname@example.org&fbfname=Vijay&fblname=Ramasamy&listing=true