A couple finances a house valued at $125,000. They make a $20,000 down payment and finance the remainder for 30 years at 6.8%. Taxes on the property are estimated to be $621 per year. Insurance on the property is projected to cost $685 per year.
The monthly PITI payment is:
balance to be mortgaged = 125000-20000 = 105000
let the monthly mortgage payment be x
x (1 - 1.005666667^-360)/.005666667 = 105000
i got x = $684.52
divide each of the insurance and taxes by 12 and add to the mortgage payment.
For your question:
x=[150000(.005666667)(1.00566666667)^360]/[(1.00566666667)^360 -1]
x=977.88778 as the mortgage payment. Then add 1/12(621+685)=108.83333, and you have $1086.72 as the total monthly payment.
Sorry about that. I miscalculated. For your question:
x=[105000(.005666667)(1.00566666667)^360]/[(1.00566666667)^360 -1]
x=684.521 as the mortgage payment. Then add 1/12(621+685)=108.83333, and you have $793.35 as the total monthly payment.
To calculate the monthly PITI payment, we need to consider four components: Principal, Interest, Taxes, and Insurance.
1. Principal: The amount of money borrowed, which is the house price minus the down payment. In this case, the principal amount is $125,000 - $20,000 = $105,000.
2. Interest: The interest is calculated based on the loan amount and the interest rate. In this case, the loan amount is $105,000 and the interest rate is 6.8% per year. To find the monthly interest rate, divide the annual interest rate by 12 months and convert it to a decimal: 6.8%/12 = 0.568%.
3. Taxes: The annual property tax on the house is $621. To find the monthly property tax payment, divide the annual amount by 12 months: $621/12 = $51.75.
4. Insurance: The annual insurance cost for the property is $685. Similar to taxes, divide the annual amount by 12 months to find the monthly insurance payment: $685/12 = $57.08.
Adding all these components together, the monthly PITI payment can be calculated as follows:
Principal + Interest + Taxes + Insurance = $105,000 * (0.568%/100) / (1 - (1 + 0.568%/100)^(-30*12)) + $51.75 + $57.08
Using the formula for the monthly mortgage payment on a fixed-rate loan:
M = P * (r*(1+r)^n) / ((1+r)^n-1)
Where:
M = monthly mortgage payment
P = principal loan amount
r = monthly interest rate
n = total number of payments
Plugging in the values:
M = $105,000 * (0.568%/100) / (1 - (1 + 0.568%/100)^(-30*12)) + $51.75 + $57.08
After performing the calculations, the monthly PITI payment for this mortgage would be approximately $727.68.