Question

Roxanne paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for Roxanne's monthly PITI payment?

A)
$75.88
B)
$63.23
C)
$63
D)
$75.60

Answer 1

Roxanne's monthly PITI payment for taxes, calculate the annual property tax by assessing the property at 80% of its market value, apply the tax rate, and then divide by 12 to find the monthly escrow amount. The closest option is B) $63.23.

Step-by-step explanation:

To determine how much will be escrowed for Roxanne's monthly PITI payment, we need to calculate her annual property tax and then divide it by 12 to find the monthly amount.

First, assess the property at 80% of its market value:

• Assessed value = 0.80 × $135,500 = $108,400

Next, calculate the annual property taxes using the tax rate of 700 mills, which means $0.70 for every $100 of assessed value:

• Tax = ($108,400 / $100) × 700 mills = $1084 × 0.70 = $759.20 annually

Finally, divide the annual amount by 12 to find the monthly escrow for taxes:

• Monthly Tax Escrow = $759.20 / 12 months ≈ $63.27

Since none of the options exactly matches this value, the closest option is B) $63.23, assuming there might be rounding differences in the question options.