Question

Karl is purchasing a $205,000 home with a 30-year mortgage at 5.5%. Because he is not making a down payment, PMI in the amount of $97.50/month is required for the first 2 years of the loan. Based on this information, what is the total cost of this loan?

Answer 1

$421,369.20 , I just had this question on Apex.

Answer 2

The total loan payment is:is $1,024,050

Explanation:

To know the total cost of this loan we must sum the the purchasing the mortgage loan LM and the PMI:

L=LM+PMI

The 30-year mortgage loan of $205,000 at 5.5% interest rate can be calculated as:

LM=$205,000*(1+0.055)^30

LM=$205,000*4.984 = $1,021,710

Then for the PMI over 24 months:

PMI: $97.5* 24 = $2,340

Therefore the total loan payment is:

L= $1,021,710 + $2,340 = $1,024,050