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Ssuppose you obtain a 25-year mortgage loan of $193,000 at an annual interest rate of 8.5%. The annual property tax bill is $979 and the annual fire insurance premium is $495. Find the total monthly payment for the mortgage, property tax, and fire insurance. (Round your answer to the nearest cent.)​

User Simon Pham
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1 Answer

5 votes

Answer:

$1,667.04

Explanation:

To find the total monthly payment for the mortgage, property tax, and fire insurance, we need to first calculate the monthly mortgage payment using the given information.

The first step is to calculate the monthly interest rate by dividing the annual interest rate by 12:

⇒ 8.5% / 12 = 0.00708333

Next, we need to calculate the total number of monthly payments over the life of the loan:

⇒ 25 years x 12 months/year = 300 months

Using the formula for the monthly payment on a mortgage:

⇒ M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

where M is the monthly payment, P is the loan amount, i is the monthly interest rate, and n is the total number of payments, we can calculate the monthly payment on the mortgage:

⇒ M = $193,000 [ 0.00708333(1 + 0.00708333)^300 ] / [ (1 + 0.00708333)^300 – 1 ] = $1,544.21

Next, we need to add the annual property tax and fire insurance premiums and divide by 12 to get the monthly amounts:

⇒ Property tax = $979 / 12 = $81.58

⇒ Fire insurance = $495 / 12 = $41.25

Finally, we add the monthly mortgage payment, property tax, and fire insurance to get the total monthly payment:

⇒ $1,544.21 + $81.58 + $41.25 = $1,667.04

Therefore, the total monthly payment for the mortgage, property tax, and fire insurance is $1,667.04 rounded to the nearest cent.

User Artie
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