# My First Home!

## 14304 Horton St, Overland Park, KS 66223

\$499,000

5 beds 4.1 baths 4,952 sqft

## Determining what I could afford.

Annual Salary: \$70,000

Loans: \$35,000 w/ 6.8% for 10 years

35,000= R(1-(1+0.068/12)^-120 / (0.068/12))

R= \$402.78

-----------------> \$402.78/month

Car Payment: \$325.00/month

Monthly Salary: 70,000/12= \$5833.33

Remaining After Loan Payments: \$5833.33-402.78-325.00= \$5105.55

## Monthly Necessities

Food: \$260.90

Gas: \$100.00

Car Insurance: \$113.00

Insurance: \$229.16

Utilities: Gas: \$150.00

Electricity: \$130

Water: \$100.00

Cell Phone: \$200.00

Entertainment: \$150.00

Clothes: \$250.00

Home Owner Association: \$93.00

TOTAL: \$1776.06

## Loan

In determining how much money to borrow, I subtracted my net monthly income from my monthly necessities.

\$5105.55-\$1776.06= \$3329.49

From there, I knew that I could afford \$3422.49 a month at MOST. I then figured, at most, the money I could borrow by:

PV= 3329.49(1-(1+0.03871/12)^-360 / (0.03871/12)

PV= \$708,389.60

I knew I did not need a \$700,000 home considering, 25 and single, but I did set a budget for \$500,000.

## Interest Rate

After finding the interest rate of 3.871% on February 11,2016, I was then able to calculate my minimum monthly payments on my \$499,000 home!

499,000= R(1- (1+0.03871/12)^-360 / (0.03871/12)

R= \$2,345.34

My monthly mortgage will is going to be \$2,345.34 for 30 years!

## Upping the Ante

I figured that since my monthly payments were less than that of what I could actually afford, I would maybe be able to increase the minimum monthly payment by 15%!

\$2,345.34 x 0.15 = \$351.80

\$2,345.34 + \$351.80 =\$2697.14

In this scenario my new monthly payments would be \$2697.14, and I would then be able to pay off my loan faster! I actually calculated to see how much time and money I would save by doing this.

If I payed \$2697.14 a month, lets see how long it would take me to pay off my loan:

499,000=2697.14(1-(1+0.03871/12)^-n / (0.03871/12)

185.0108=(1-(1+0.03871/12)^-n / (0.03871/12)

n=282.04 months

If I were to increase my monthly payments by 15% I could pay off my house in 23.5 years rather than 30! Saving just about 6.5 years... I may have to thing about doing this! Lets see how much money I would save:

Original:

\$2,345.34 x 12 x 30 = \$844,322.40

New:

\$2,697.14 x 12 x 23.5 = \$760,593.48

Save:

\$844,322.40 - \$760,593.48 = \$83,728.92

Oh wow! I could save not only 6.5 years but \$83,728.92. I really need to consider this option of paying 15% more!