Question

Ben and Carla Covington plan to buy a condominium. They will obtain a $230,000, 20-year mortgage at 6.0 percent. Their annual property taxes are expected to be $1,700. Property insurance is $620 a year, and the condo association fee is $260 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7. (Round your intermediate calculations and final answer to 2 decimal places.

Answer 1

Calculate the amount of loan installment as follows:

The period of repayment is 20 years.

The rate of interest is 6%.

The mortgage loan amount is $220,000.

Monthly Loan Installment = [P*r (1+r)^n] / [ (1+r)^n - 1]

[220,000 * (0.06/12) * (1+0.06/12)^240] / [(1+0.06/12)^240 - 1] = 1,576

Total Monthly Installment = Loan Installment + Property taxes + Insurance + Condo Association Fee

1576 + 142 [1700/12] + 52 [620/12] + 260 = 2030

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