My First Home!

My financial experience.

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.

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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!

First Year Amortization

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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!