Question

Oliver purchases a house and gets a 30-year mortgage for $150,000 at 5.25% apr. in addition to the monthly payment, the lender requires him to pay eto an escrom account for the homeowners insurance and property tax. his homeowners insurance is $1200 per year and the property tax is s1800 per year. determine the monthly payment to the lender that includes the insurance and property tax. round your answer to the nearest cent.

Answer 1

To calculate Oliver's total monthly payment to the lender, we would calculate the monthly mortgage payment using the loan amount, interest rate, and term, then add $250 for the escrow payment that covers homeowners insurance and property taxes.

Step-by-step explanation:

Oliver needs to determine the monthly payment for his 30-year mortgage on a $150,000 house at an APR of 5.25%, in addition to payments to an escrow account for homeowners insurance and property tax. To calculate the monthly mortgage payment, we use the formula for monthly payments on an amortizing loan, which can be found using an amortization calculator or by applying the formula itself. For the escrow component, we add the annual homeowners insurance of $1,200 and the annual property tax of $1,800, and divide by 12 to get the monthly cost.

The calculation for the mortgage payment would require the loan amount, annual interest rate, and loan term. However, for the escrow account, we take the sum of the insurance ($1,200) and property tax ($1,800), which equals $3,000 per year. Dividing this amount by 12 months gives us an additional $250 per month for the escrow account.

To provide the total monthly payment to the lender, we would add the monthly mortgage payment to the $250 from the escrow account.