# Jenny's First Home

## Able to Afford Each Month

Jenny's \$40,000 salary becomes approximately \$28,000 after federal taxes. This means she has an income of \$2,333.33 per month. Subtracting \$230 for her car payment, and \$230.16 for her student loans, Jenny is only able to pay \$1873.17 on a house per month. \$1,000 is also subtracted to represent other expenses even though a larger amount of money is needed. Jenny able to pay \$873.17 each month on her house.

## Cost of a House

The 4.625% interest for a 30 year fixed loan and the \$873.17 able to spend on a mortgage each month was plugged into the Present Value equation to discover that Jenny is able to buy a house that cost up to \$169,831.33

## Monthly Payment

Jenny's minimum monthly payment for 30 years is \$641.31. If the monthly payment is increased by 15%, Jenny would save \$34,635.06

## Justification

\$641.39 x 30 x 12=\$230,900.40

\$737.60 (15% increase) x 30 x 12=\$265,535.46

\$265,535.46 - \$230,900.4=\$34.635.06