# Pre-Calc Finance Project

## Jenny's Situation #3

Jenny is looking to buy a new home, she has \$20,000 of student loans, a \$230 monthly car payment, and she brings in a \$40,000 salary.

## Monthly Amount

Jenny has a \$40,000 salary, when the 30% of taxes is deducted she has a remaining \$28,000. Then when you subtract her monthly car payment of \$230, she has \$25,240 remaining. To account for her student loans, she must pay \$230.16 monthly as a minimum payment to reach her 10 year requirement at 6.8% interest, this leaves Jenny with \$22,478.08 remaining after her expenses are deducted from her salary. After dividing the \$22,478. 08 by 12 (months) she has about \$1800 that can be put toward the house, but realistically she should only \$1000 monthly payment which allows he to buy a house from \$0-\$150,000.

## Borrowing Money and Monthly payment

Jenny chooses to get her loan from Bank of America, assuming that she is approved for the 30-year fixed, her rate would be 4.625%. She can afford to get a \$140,000 loan, she would have a minimum monthly payment of \$719.80.

## Increased Principle

If Jenny increased her \$719.80 monthly house payment by 15% she would be paying \$107.97 more which is a total of \$827.77 per month. Jenny would then have payed off her loan 7 years or 85 months earlier then if she had not increased her monthly payment by 15%. Before Jenny would have payed a total of \$259,128, after her payment increase she would pay only \$227,048.21. By increasing her monthly payment 15% Jenny could save \$32,079.79.

## APA Citation

Bank of America Corporation. (2014). Mortgage: Buy a Home. [ONLINE] Available at: https://www.bankofamerica.com/home-loans/mortgage/overview.go. [Last Accessed January 1, 2014].