Final answer:
The total monthly payment for the mortgage, property tax, and fire insurance combined is $1,704.24.
Step-by-step explanation:
To calculate the total monthly payment for the mortgage, property tax, and fire insurance, we need to determine the monthly mortgage payment and then add the monthly costs of property tax and fire insurance.
Firstly, using the loan amount of $193,000 at an annual interest rate of 8.7% for 25 years, the formula for the monthly mortgage payment (PMT) is:
PMT = P × r × (1 + r)n / ((1 + r)n - 1)
Where P is the principal amount ($193,000), r is the monthly interest rate (8.7% annually gives 0.087/12 per month), and n is the total number of payments (25 years × 12 months/year).
Plugging in the values, we get:
PMT = $193,000 × 0.00725 × (1 + 0.00725)300 / ((1 + 0.00725)300 - 1) = $1,582.74
Next, we convert the annual property tax bill ($970) and the annual fire insurance premium ($488) into monthly amounts:
Property Tax (monthly) = $970 / 12 months = $80.83
Fire Insurance (monthly) = $488 / 12 months = $40.67
We then add these amounts to the monthly mortgage payment:
Total Monthly Payment = $1,582.74 (mortgage) + $80.83 (property tax) + $40.67 (fire insurance) = $1,704.24
So the total monthly payment would be $1,704.24, rounded to the nearest cent.