Question

paring monthly and annual premium payments
roselyn is evaluating mortgage insurance quotes for her $300,000 loan. one quote offers a monthly premium rate of 0.3%, while another offers an annual premium rate of 2.5%.
how much more annually does the monthly premium option cost compared to the annual premium option?
$900 $10,800 $7,500 $3,300

Explanation:

Step1: Calculate monthly premium annual cost

The loan amount is \$300,000 and the monthly premium rate is 0.3\%. First, find the monthly premium: \(\$300,000\times0.3\% = \$300,000\times0.003=\$900\) per month. Then, the annual cost for the monthly premium option is \(12\times\$900 = \$10,800\).

Step2: Calculate annual premium cost

The annual premium rate is 2.5\%, so the annual cost for the annual premium option is \(\$300,000\times2.5\%=\$300,000\times0.025 = \$7,500\).

Step3: Find the difference

Subtract the annual premium cost from the monthly premium's annual cost: \(\$10,800 - \$7,500=\$3,300\).

Answer:

\$3,300