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?
11,400.00
900.00
11,200.00
10,800.00
Please Help!!
I have the total cost of payments being 809.32 plus the monthly payment p&i 586.82 Im not sure how to solve for the total first year cost ??
To calculate the total first-year cost of renting the home, you need to consider the down payment, mortgage payments, property taxes, and home insurance. Here's how you can calculate it step by step:
1. Calculate the down payment:
The down payment is 20% of the home's purchase price, which is $150,000.00. So, the down payment is 20% of $150,000.00, which comes out to be $30,000.00.
2. Calculate the mortgage payments:
You mentioned that the mortgage has a 30-year term and an interest rate of 4.2%. To calculate the monthly mortgage payment, you can use a mortgage calculator or formula. The formula to calculate the monthly mortgage payment is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Where:
M = Monthly mortgage payment
P = Loan amount (purchase price - down payment)
i = Monthly interest rate (annual interest rate / 12)
n = Total number of monthly payments (30 years * 12 months/year)
Using this formula:
P = $150,000.00 - $30,000.00 = $120,000.00
i = 4.2% / 100 / 12 = 0.0035 (monthly interest rate)
n = 30 years * 12 months/year = 360 (total number of monthly payments)
Now, you can plug these values into the formula to calculate the monthly mortgage payment (M).
3. Calculate the property taxes:
You mentioned that the annual property taxes are $1,920.00. To find the monthly property tax payment, you can divide the annual property tax by 12 months.
Monthly property tax = $1,920.00 / 12 = $160.00
4. Calculate the home insurance:
You mentioned that the annual home insurance is $750.00. Just like property taxes, you need to divide the annual insurance amount by 12 months.
Monthly home insurance = $750.00 / 12 = $62.50
Now that you have calculated the down payment, monthly mortgage payment, monthly property tax payment, and monthly home insurance payment, you can calculate the total first-year cost by adding them all up and multiplying the monthly payments by 12.
Total first-year cost = Down payment + (Monthly mortgage payment * 12) + (Monthly property tax * 12) + (Monthly home insurance * 12)
Verify the calculations and choose the correct answer among the given options.