using homeowners insurance of \$789 per year, property taxes .85\% per year, and the annual 1\% of the homes purchase price for maintenance, what is the true cost of a \$110,000 home with a 30 year mortgage payment of \$617.68 per month?

\$312,078.42
\$327,769.09
\$301,307.90
\$307,084.80

Question

using homeowners insurance of \$789 per year, property taxes .85\% per year, and the annual 1\% of the homes purchase price for maintenance, what is the true cost of a \$110,000 home with a 30 year mortgage payment of \$617.68 per month?

\$312,078.42
\$327,769.09
\$301,307.90
\$307,084.80

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Property Tax Calculation", "Total Cost of Homeownership" ], "new_concepts": [], "current_concepts": [ "Property Tax Calculation", "Total Cost of Homeownership" ] } ## Calculate total mortgage payments Using the *Total Cost of Homeownership* knowledge point $$ \begin{aligned} \text{Monthly Payment} &= \$617.68 \ \text{Total Months} &= 30 \times 12 = 360 \ \text{Total Mortgage Cost} &= \$617.68 \times 360 = \$222,364.80 \end{aligned} $$ ## Calculate annual recurring costs Using the *Property Tax Calculation* and *Total Cost of Homeownership* knowledge points $$ \begin{aligned} \text{Home Purchase Price} &= \$110,000 \ \text{Annual Property Tax} &= 0.85\% \times \$110,000 = 0.0085 \times \$110,000 = \$935.00 \ \text{Annual Homeowners Insurance} &= \$789.00 \ \text{Annual Maintenance Cost} &= 1\% \times \$110,000 = 0.01 \times \$110,000 = \$1,100.00 \ \text{Total Annual Recurring Cost} &= \$935.00 + \$789.00 + \$1,100.00 = \$2,824.00 \end{aligned} $$ ## Calculate total recurring costs over 30 years Using the *Total Cost of Homeownership* knowledge point $$ \begin{aligned} \text{Total Recurring Costs} &= \$2,824.00 \times 30 = \$84,720.00 \end{aligned} $$ ## Calculate the true cost of the home Using the *Total Cost of Homeownership* knowledge point $$ \begin{aligned} \text{True Cost} &= \text{Total Mortgage Cost} + \text{Total Recurring Costs} \ \text{True Cost} &= \$222,364.80 + \$84,720.00 = \$307,084.80 \end{aligned} $$

(A) $312,078.42

(B) $327,769.09

(C) $301,307.90

(D) $307,084.80

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Real Estate Finance", "Total Cost of Homeownership" ] }

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QUESTION IMAGE

Question

Explanation:

Calculate total mortgage payments

Calculate annual recurring costs

Calculate total recurring costs over 30 years

Calculate the true cost of the home

Answer: