Suppose the Bainters purchase the $150,000.00
home with a 20%
down payment, a 30-
year mortgage, and an interest rate of 4.2%.
Annual property taxes are $1920.00
. Home insurance is $750.00
per year, which is to be placed into an escrow account.
What is the Bainters' monthly cost if they purchase the home?
Enter your answer as a dollar amount, such as: $206.75.
What is the total first-year cost when renting the home?
To find the Bainters' monthly cost if they purchase the home, we need to consider the mortgage payment, property taxes, and home insurance.
1. Mortgage Payment:
The down payment for the home is 20%, which is 20% of $150,000.00 = $30,000.00
Therefore, the loan amount is $150,000.00 - $30,000.00 = $120,000.00
Using the formula for calculating mortgage payments, we can calculate the monthly mortgage payment.
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly mortgage payment
P = Loan amount ($120,000.00)
i = Monthly interest rate (4.2% / 12)
n = Number of monthly payments (30 years * 12 months per year = 360 months)
i = 4.2% / 100 / 12 = 0.0035
n = 360
M = $120,000.00 * [ 0.0035(1 + 0.0035)^360 ] / [ (1 + 0.0035)^360 – 1 ]
M ≈ $590.37
2. Property Taxes:
The annual property taxes are $1920.00. To find the monthly property tax payment, we divide this amount by 12 months.
Monthly property tax payment = $1920.00 / 12 = $160.00
3. Home Insurance:
The annual home insurance is $750.00. To find the monthly home insurance payment, we divide this amount by 12 months.
Monthly home insurance payment = $750.00 / 12 = $62.50
Therefore, the total monthly cost for the Bainters if they purchase the home is:
Monthly Cost = Mortgage Payment + Property Taxes + Home Insurance
Monthly Cost = $590.37 + $160.00 + $62.50
Monthly Cost ≈ $812.87
For the total first-year cost when renting the home, we need to consider the monthly rent, which is not mentioned in the given information. Without the monthly rent, we cannot calculate the total first-year cost when renting the home.