Final answer:
The Bainters' monthly cost for a $150,000 home with a 20% down payment, a 30-year mortgage at 4.2% interest, annual property taxes of $1,920, and home insurance of $750 is approximately $1,222.50.
Step-by-step explanation:
To calculate the Bainters' monthly cost for purchasing a $150,000 home, we must consider the down payment, mortgage payment, property taxes, and home insurance. Firstly, a 20% down payment on the home price of $150,000 is $30,000, leaving a mortgage balance of $120,000.
Using the provided interest rate of 4.2% annually for a 30-year mortgage, we can calculate the monthly mortgage payment. While a formula or financial calculator could be used to determine the exact monthly payment, for teaching purposes, let's assume it is similar to Joanna's scenario provided above. Joanna could afford a loan with $12,000 annual payments at 4.2% interest, which is $1,000 monthly. Given that interest rates and timeframes are a match, we'll use this as an approximation, recognizing an exact calculation would likely be slightly different.
Additionally, annual property taxes of $1,920 and home insurance of $750 will be added to the escrow account, which needs to be divided by 12 to find the monthly contribution. So, the total monthly cost is the sum of the monthly mortgage payment ($1,000), monthly property taxes ($160), and monthly home insurance ($62.50).
The Bainters' total monthly cost would approximately be $1,000 + $160 + $62.50 = $1,222.50.