Pre- Calc Assignment

Grace Brunner, Hour 5

Brent bought a house for $249,000

Brent took a 30 year fixed rate loan with an interest of 3.75% (information gathered from Wells Fargo). He makes an income of $50,000 a year, but after taxes taking 30% of his income, he only makes $35,000 a year. He recently bought a new car for $23,000 with a 6.5% five- year loan, meaning he will be paying $450 per month for 5 years. All of this affects his possible monthly payments on the house he chooses to buy.
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19015 W 159th Ter Olathe, KS 66062

This is a $249,000 house with 3 bedrooms and 3 full bathrooms. I chose this house because the absolute maximum he could afford to spend was about $323,893.00, but that was really, really pushing the border. I wanted to give him plenty of room in his purchase and not push his budget. This $249,000.00 house with the minimum possible $1,153.00 monthly payments was a nice solution.

Other Monthly Costs

Food- $300.00

Transportation- N/A, He used his car, so transportation is added into gas cost.

Gas- $105.00

Car Insurance- $50 (State Farm charges about $600 per year)

Utilities- $200

Cell Phone- $63.00

Entertainment- $110

Total Monthly Expenses- $828.00

Brent is spending $1153 a month towards his house, $828 a month towards other expenses, and (for the first five years) $450 a month towards his car loan. That makes a total of $2,431 a month including the car payment and $1,981 a month not including the car payment. his job allows him $2916.67 a month approximately ($35,000 a year divided by 12 months) and it should be noted all money not being used towards these payments is emergency money or spot money in case a certain payment is more than usual or he needs any emergency money for any reason.
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If the monthly Payment was raised by 15%...

Raising the monthly payment by 15% would raise it from $1,153.00 to $1,325.00. This would lower the necessary time to pay off the loan from 360 months (30 years) to 283 months ( 23.6 years). It would lower the total spending from $415,080.00 to $ 374,975.00. In total, It would save 77 months( 6.4 years) and $40,105.00.

Sources

19015 W 159th Ter Olathe, KS 66062. (n.d.). Retrieved February 15, 2016, from http://www.realtor.com/realestateandhomes-detail/19015-W-159th-Ter_Olathe_KS_66062_M88796-47095


Get Insurance Quotes – Save on Auto Insurance – State Farm®. (n.d.). Retrieved February 15, 2016, from https://www.statefarm.com/?cmpid=ps:google:National


Today's Mortgage Rates and Refinance Rates. (n.d.). Retrieved February 15, 2016, from https://www.wellsfargo.com/mortgage/rates/