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A couple bought a rental house for $195,000 it’s assessed value was $180,000 if the tax rate is $1.50 per $100 of assessed value what is the monthly contribution the lender will require for taxes round to the nearest cent

User Caheem
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1 Answer

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Explanation:

there is no interest and such involved. it is a straight forward calculation to allow the lender to accumulate enough funds (= the ESCROW account as part of the mortgage account structure) to be able to pay the taxes once a year on behalf of the owners.

so, the tax is $1.50 for every $100 of the assessed value of the house.

how many $100 units are in that value ?

180,000 / 100 = 1,800 units.

that means the tax for that house is

1800 × 1.5 = $2,700

in order for the lender to accumulate $2,700 in the ESCROW account in a year (= 12 months), the monthly contribution has to be

2700 / 12 = $225.00

User Resueman
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