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 total first-year cost when renting the home?
A) 11,400.00
B) 900.00
C) 11,200.00
D) 10,800.00
Help please !!!
Wouldnt the monthly payment be 809.32??
Let's start by letting me know what you monthly payment is.
i = .042/12 = .0035
n = 12(30) = 360
now your Present Value is only .8(150000) = ....
make sure you use the correct formula
nope ....
P(1 - 1.0035^-360)/.0035 = 120000
did you have that equation?
Ah. So 586.820?
To calculate the total first-year cost when renting the home, we need to consider the down payment, mortgage payments, property taxes, and home insurance. Here's how to calculate it step by step:
1. Down payment:
The Bainters purchase the $150,000.00 home with a 20% down payment. To find the down payment amount, multiply the home's price by the down payment percentage:
Down payment = $150,000.00 x 0.20 = $30,000.00
2. Mortgage payments:
Since they have a 30-year mortgage, we can use a mortgage calculator to find the monthly mortgage payment. We need to know the loan amount (home price - down payment), the interest rate, and the number of payments (30 years = 360 months). Using these values, the monthly mortgage payment can be calculated.
Loan amount = $150,000.00 - $30,000.00 = $120,000.00
Monthly mortgage payment = Pmt (Loan amount, Interest rate, Number of payments)
Using the given interest rate of 4.2%, the formula becomes:
Monthly mortgage payment = Pmt($120,000.00, 4.2%/12, 360)
Using a financial calculator or spreadsheet, we can find that the monthly mortgage payment is approximately $590.16.
3. Annual property taxes:
The property taxes are $1920.00 per year. So, we can simply take this value as is.
4. Home insurance:
The home insurance cost is $750.00 per year.
5. Escrow account:
To calculate the total amount needed for the escrow account, we need to add the annual property tax and the home insurance cost:
Escrow account = Property taxes + Home insurance
Escrow account = $1920.00 + $750.00 = $2670.00
Now, we can calculate the total first-year cost by adding the down payment, mortgage payments, and escrow account:
Total first-year cost = Down payment + Mortgage payments + Escrow account
Total first-year cost = $30,000.00 + (12 x $590.16) + $2,670.00
Total first-year cost = $30,000.00 + $7,081.92 + $2,670.00
Total first-year cost = $39,751.92
So, the total first-year cost when renting the home is $39,751.92.
Therefore, none of the provided answer options (A, B, C, D) are correct.