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Suppose you obtain a 30-year mortgage loan of $191,000 at an annual interest rate of 8
Suppose you obtain a 30-year mortgage loan of $191,000 at an annual interest rate of 8.2%. The annual property tax bill is $965 and the annual fire insurance premium is $498. Find the total monthly payment for the mortgage, property tax, and fire insurance. (Round your answer to the nearest cent.)
Expert Solution
Computation of Total Monthly Payment for the mortgage, property tax, and fire insurance:
First, We calculate Monthly Payment for the mortgage using PMT Function in Excel:
=pmt(rate,nper,-pv,fv)
Here,
PMT = Monthly Payment for the mortgage = ?
Rate = 8.2%/12 = 0.68% compounded monthly
Nper = 30 Years*12 = 360 Months
PV = $191,000
FV = 0
Substituting the values in formula:
=pmt(0.68%,360,-191000,0)
PMT or Monthly Payment for the mortgage = $1,428.21
Annual Property Tax Bill = $965
Annual Fire Insurance Premium = $498
Total Annual Payment = $965+$498 = $1,463
Monthly Payment = $1,463/12 = $121.92
Total Monthly Payment for the mortgage, property tax, and fire insurance = $1,428.21 + $121.92 = $1,550.13
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