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Mike purchased a home the mortgage is $235,000 at 8 3/4 % for 25 years. His annual property taxes on the home are $6,345 he also has to pay hazzard insurance in the amount of $1,479. What is the PITI payment of their loan ?
I am not to sure about this one
The choices are A. 1,849.45 B. 2,586.05 or C. 652.00
My answer is c
Mike purchased a home the mortgage is $235,000 at 8 3/4 % for 25 years. His annual property taxes on the home are $6,345 he also has to pay hazzard insurance in the amount of $1,479. What is the PITI payment of their loan ?
I am not to sure about this one
The choices are A. 1,849.45 B. 2,586.05 or C. 652.00
My answer is c
The loan payment derives from
R = Pi/[1 - (1+i)^-n]/i where P is the loan value, n = the number of interest periods = 25(12) = 300 and i = the montly decimal equivalant of the interest rate = .0875/12 = .0072916666.
Thus, R = 235,000[1 - (1.0072916666)^-300]/.0072916666 = 1932.03.
The monthly payment for the taxes and hazard insurance are (6345 + 1479)/12 = $652.
Therefore, the total monthly payment is $2584.03, close to B.
To calculate the PITI (Principal, Interest, Taxes, and Insurance) payment of a loan, you need to consider four components:
1. Principal and Interest Payment: This is the amount you pay towards repaying the loan principal and accruing interest. To calculate this, you can use a mortgage calculator or formula.
2. Property Taxes: This is the annual amount paid towards property taxes on the home.
3. Hazard Insurance: This is the insurance paid to protect against property damage or loss.
To find the PITI payment, you need to add the principal and interest payment, property taxes, and hazard insurance.
Now, let's calculate it step by step:
1. Principal and Interest:
The mortgage is $235,000 at 8 3/4% for 25 years.
To calculate the principal and interest payment, you can use a loan calculator or formula. Using a loan calculator, the principal and interest payment for a $235,000 mortgage at 8 3/4% interest for 25 years is approximately $1,717.85 per month.
2. Property Taxes:
The annual property taxes on the home are $6,345.
To convert annual property taxes to a monthly amount, divide $6,345 by 12 months. This gives you a monthly property tax payment of approximately $528.75.
3. Hazard Insurance:
The hazard insurance amount is $1,479.
4. PITI Payment:
To find the PITI payment, add the principal and interest payment, property taxes, and hazard insurance.
$1,717.85 (Principal and Interest) + $528.75 (Property Taxes) + $1,479 (Hazard Insurance) = $3,725.60.
So, the correct answer is not C ($652.00), but option B ($2,586.05).
Please note that calculations may vary slightly depending on rounding and exact interest calculations. It is always advisable to double-check with a financial professional or use a mortgage calculator for precise calculations.