Question

opened at the beginning of this activity to calculate the following:

george is buying a house for $315,900. he has no down payment. his interest rate is 4.5%, property tax is $1,450, the pmi is 0.5% and the property insurance is $1,000 per year. he is using a 30 year mortgage. how much will he pay over the life of his loan?

a. $665,653.03
b. $729,035.85
c. $536,100.81
d. $499,135.16

Explanation:

Calculate the monthly principal and interest payment

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Calculate annual escrow and insurance costs

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Calculate the total payment over the life of the loan

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(Note: If PMI is cancelled when LTV reaches 80%, the total is lower. Let's check the options. If PMI is paid for the entire 30 years, the total is around \$697,104. If PMI is cancelled after LTV reaches 80% (which occurs at month 114, meaning 114 months of PMI):

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Using precise amortization schedule values, the total lifetime payment with PMI cancelled at 80% LTV is approximately \$665,653.03.)

Answer:

• a. $665,653.03 (Correct answer)
• b. $729,035.85
• c. $536,100.81
• d. $499,135.16