Jacob Flekier Finance Project
Hour 4 Pre Calculus Scenario 3
Jenny's Financial Situation
She makes $40,000 a year, but has to pay $230 monthly for her car, $230.16 a month for 10 years to pay off her student loans because she has $20,000 to pay at an interest rate of 6.8%, and 30% of her salary goes to taxes, so she needs to pay $12,000 annually to taxes. So she then only makes $22,480 a year.
Solving for R, we find that she needs to pay $230.16 monthly for her student loans for 10 years.
She makes $40,000 a year and 30% of that goes to taxes, so she pays $12,000 to taxes a year.
Remaining Annual Salary
After paying for her car payment, taxes, and student loans, she then only makes $22,480 a year.
So before she is looking to buy the house, she has made $22,480 a year for 3 years as a bank teller. But we haven’t taken into account living expenses and other savings. After subtracting living expenses per year, and multiplying that amount by 3 because she worked for 3 years saving money, she has $49,440, but after subtracting money that she's going to save away, she has $40,000 for a house payment.
But how much can she afford each month for a house?
She can now figure out how much she can afford per month. She is making $16,480 a year to save up for the house, however she should probably save $3,000 a year away for other things she needs to spend money on. Now she has $13,480 a year that she can use for house related expenses. She will need $3600 for utilities and insurance, and $2000 for Real Estate Taxes annually (based on area) so she has $7,880 left for a house payment per year, which is $656.66 per month.
What is an interest rate for a 30 year fixed loan?
For a 30 year fixed loan rate, and she is buying a house for $161,900 and needs a loan of $121,900, Bank of America has an interest rate of 4.625%, as seen from their website in the mortgage rate calculator after typing in the cost of the house and the amount of money needed for a loan.
What is the minimum payment required each month once the mortgage has been approved?
The minimum payment required each month once the mortgage has been approved is $627 a month, as seen from their website in the mortgage rate calculator after typing in the cost of the house and the amount of money needed for a loan.