Question

Ben and Carla Covington plan to buy a condominium. They will obtain a $225,000, 30-year mortgage at 7.5 percent. Their annual property taxes are expected to be $2,050. Property insurance is $530 a year, and the condo association fee is $245 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7. (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

Monthly housing payment 2,033.22

Step-by-step explanation:

We need to calculate the monthly cuota of the mortgage

It will be the cuota of a 30 year annuity at 7.5 rate

`PV / (1-(1+r)^(-time) )/(rate) = C`

We should convert the year in month and the rate in monthly, because the payment are monthly.

time= 30 year so 30 x 12 = 360 months

rate = 0.075 / 12 = 0.00625 monthly

Present Value = 225,000

`225,000 / (1-(1+0.00625)^(-360) )/(0.00625) = C`

C = $1,573.23

Now we will calculate the propert taxes, insurance per month

2,050 / 12 = 170.83

530 / 12 = 44.16

1,573.23 + 170.83 + 44.16 + 245 = 2,033.22