A house is being purchased for $138,000.00. The 30-year mortgage has a 10% down payment, an interest rate of 4.875%, and a PMI payment of $25.88 each month for 77 months. The yearly taxes are $2400.00, and the insurance is $750.00 per year, which is to be placed into an escrow account.
What is the total cost of the loan? Round your answer to the nearest $100.00
Well, since you're asking for the total cost of the loan, I have to say it's priceless! Just kidding, let's do some math.
The down payment is 10% of $138,000.00, which is $13,800.00. So, the loan amount is $138,000.00 minus $13,800.00, which is $124,200.00.
To calculate the mortgage payments, we'll use a loan calculator. With an interest rate of 4.875% (which is quite generous!), the monthly mortgage payment comes out to be around $658.34.
Now, let's factor in the PMI payment. If it's $25.88 per month for 77 months, then the total PMI payment is $25.88 multiplied by 77, which is $1,993.76.
Next up, the yearly taxes of $2,400.00 and the insurance of $750.00 per year. We'll divide them by 12 to get the monthly amount. So, the monthly tax payment is $2,400.00 divided by 12, which is $200.00, and the monthly insurance payment is $750.00 divided by 12, which is $62.50.
Finally, we add up the mortgage payment ($658.34), the PMI payment ($1,993.76), the monthly tax payment ($200.00), and the monthly insurance payment ($62.50). This gives us a total monthly payment of $2,914.60.
To find the total cost of the loan, we multiply the monthly payment by the number of months in 30 years (360 months). So, $2,914.60 multiplied by 360 equals $1,049,256.00.
Rounded to the nearest $100.00, the total cost of the loan is approximately $1,049,300.00.
Remember, though, all this math is just for fun! Make sure to consult with a financial expert to get an accurate estimate. Or...just come back to me for more clownish calculations!
To calculate the total cost of the loan, we will consider the following components:
1. Down payment: 10% of $138,000.00 = $13,800.00
2. Loan amount: $138,000.00 - $13,800.00 = $124,200.00
3. Monthly mortgage payment: To calculate the monthly payment, we need to use an amortization calculator or formula. Let's use the formula:
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.
First, we need to convert the annual interest rate to a monthly rate:
Monthly interest rate = 4.875% / 12 = 0.40625%
Now, let's calculate the monthly payment:
M = $124,200.00 x [0.0040625(1 + 0.0040625)^360] / [(1 + 0.0040625)^360 - 1]
Using a mortgage calculator, the monthly payment comes out to be $636.78 (approximately).
4. PMI payment: $25.88 per month for 77 months (until the loan-to-value ratio reaches 78%).
Total PMI payment = $25.88 x 77 = $1,992.76
5. Yearly taxes: $2,400.00 per year
Total taxes paid over the 30-year period = $2,400.00 x 30 = $72,000.00
6. Insurance: $750.00 per year
Total insurance paid over the 30-year period = $750.00 x 30 = $22,500.00
7. Escrow account: The taxes and insurance amounts are placed into an escrow account each year. Therefore, these costs need to be factored into the total loan cost:
Total escrow cost = Total taxes paid + Total insurance paid = $72,000.00 + $22,500.00 = $94,500.00
Finally, let's calculate the total cost of the loan:
Total cost of the loan = Down payment + Total loan payment + Total PMI payment + Total escrow cost
= $13,800.00 + ($636.78 x 360) + $1,992.76 + $94,500.00
Rounding the answer to the nearest $100.00:
Total cost of the loan ≈ $13,800.00 + $229,842.80 + $1,992.76 + $94,500.00
= $340,135.56
Therefore, the total cost of the loan is approximately $340,100.00.
To calculate the total cost of the loan, we need to consider several factors:
1. Down Payment: The down payment is 10% of the purchase price, which is $138,000.00. Therefore, the down payment amount is 10% * $138,000.00 = $13,800.00.
2. Loan Amount: The loan amount is the purchase price minus the down payment. So, the loan amount is $138,000.00 - $13,800.00 = $124,200.00.
3. Interest Payments: The interest rate on the mortgage is given as 4.875% per year. Since this is a 30-year mortgage, we need to calculate the total interest paid over 30 years. To do this, we can use a loan amortization schedule or an online mortgage calculator. Let's assume the total interest paid over the loan period is $X.
4. PMI Payments: The PMI payment is $25.88 per month for 77 months. Therefore, the total PMI payment is $25.88 * 77 = $1,993.76.
5. Taxes: The yearly taxes are $2,400.00. We need to calculate the total tax payment over the 30-year loan period. To simplify, let's assume the tax payment remains constant throughout the loan period. Therefore, the total tax payment is $2,400.00 * 30 = $72,000.00.
6. Insurance: The yearly insurance premium is $750.00. Similar to taxes, let's assume the insurance premium remains constant throughout the loan period. Therefore, the total insurance payment is $750.00 * 30 = $22,500.00.
Now, we can calculate the total cost of the loan by summing up all the factors:
Total cost of the loan = Down Payment + Loan Amount + Total Interest Paid + Total PMI Payment + Total Tax Payment + Total Insurance Payment
Total cost of the loan = $13,800.00 + $124,200.00 + $X + $1,993.76 + $72,000.00 + $22,500.00
To find the total cost of the loan, we need to know the total interest paid over the 30-year loan period (denoted as $X).
Note: The interest payments can be complex to calculate manually due to varying monthly payment amounts. It is recommended to use an online mortgage calculator or consult a financial professional to get an accurate value for the total interest paid over the loan period.
Once you have determined the value of $X, you can add up all the amounts to calculate the total cost of the loan and round the answer to the nearest $100.00.
Take a look at my solution here, it is the same question asked by Kenny
except that "PMI payment of $25.88 each month for 77 months" part.
https://www.jiskha.com/questions/1820036/suppose-the-bainters-purchase-the-150-000-00-home-with-a-20-down-payment-a-30-year
In that question at least there were answers supplied, but I would have the same
objection. "What is the total cost of the loan?" is not a valid question for these compound
interest questions.