# Mortgage Project

## The Budget

The equation below gives the max price that Brent can afford with a monthly mortgage payment at 25%.
148,306.05=762.50(1-(1+.04625/12)^-360)/(.04625/12))

Yearly Income: 60,000\$

Yearly Income After Taxes: 42,000\$

Monthly Income: 3,500\$

Monthly Income After Car Payment: 3,050\$

25% of his monthly income, or the recommended amount to spend on housing, is 762.50.

## PAYMENTS

Bank of America offers a 30 year fixed rate of 4.625%, or 4.760% APY.

An average monthly mortgage payment is around 25%, so the ideal monthly payment is about \$762.50. This leaves \$2,287.50 for other spending, or 75% of the monthly income.

## Brent's Home

The house featured above costs \$144,900. After paying the down payment he has decided to finance the other 130,410. The interest rate provided by Bank of America for a 30 year fixed rate is 4.625%. This taken into account, Brent's monthly payment should be \$670. 49. This comes in at a little less than 25% of his monthly income (\$762.50) which gives him a little over 75% for other spending.

Cost of Home: \$144,900

Loan Amount: \$130,410 (After a 10% down payment)

Interest: 4.625% (30 year fixed rate)

Monthly payment: \$670.49

## Increase in Mortgage Payment

If Brent was to decide that he wanted to increase his mortgage payment by 15% then his monthly cost would increase to \$788.80. However it would save him \$140,282.51, and 19 years and 3 months.