Question

Ben and Carla Covington plan to buy a condominium. They will obtain a 230,000, 20-year mortgage at 6.0 percent. Their annual property taxes are expected to be1,700. Property insurance is 620 a year, and the condo association fee is260 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7.

Answer 1

To determine the total monthly housing payment for the Covingtons, we need to consider the mortgage payment, property taxes, property insurance, and condo association fee. The monthly mortgage payment is $1,707.85. Property taxes add $141.67 per month, property insurance adds $51.67 per month, and the condo association fee is $260 per month. Therefore, the total monthly housing payment for the Covingtons is $2,161.19.

Step-by-step explanation:

To determine the total monthly housing payment for the Covingtons, we need to consider the mortgage payment, property taxes, property insurance, and condo association fee.

1. The mortgage payment can be calculated using the formula for monthly payment on a fixed-rate mortgage: P = (r * A) / (1 - (1 + r)^(-n)), where P is the monthly payment, r is the monthly interest rate, A is the loan amount, and n is the number of months. In this case, the loan amount is $230,000, the interest rate is 6.0% per year or 0.5% per month, and the loan term is 20 years or 240 months. Plugging in these values, we get P = (0.005 * 230,000) / (1 - (1 + 0.005)^(-240)) = $1,707.85.
2. The annual property taxes are $1,700, so the monthly property tax payment is $1,700 / 12 = $141.67.
3. The annual property insurance is $620, so the monthly property insurance payment is $620 / 12 = $51.67.
4. The condo association fee is $260 per month.

Adding all these payments together, the total monthly housing payment for the Covingtons is $1,707.85 + $141.67 + $51.67 + $260 = $2,161.19.