Tutorial Exercise James has a mortgage of $89,500 at 7% for 25 years. The property taxes are $3,400 per year, and the hazard insurance premium is $764.50 per year. Find the monthly PITI payment. Step 1 Recall that PITI is the sum of the principal and interest portion of a mortgage payment, PI, and the tax and insurance portion, TI. monthly PITI = monthly PI+ monthly TI To find the monthly PI, first divide the amount financed, the mortgage, by 1,000 to find the number of $1,000 s financed. Find the number of $1,000 s financed for the given $89,500 mortgage. number of $1,000 s financed =1,000amountfinanced =1,00089,500= The monthly payment of the mortgage will be calculated using the number of $1,000 s financed and a factor from the following table excerpt. Monthly Payments (Necessary to amortize a loan of $1,000 ) To read this table, scan across the top row to find the number of years of the mortgage. Then look down that column to the row corresponding to the interest rate. The value at the intersection of the column and row is the table factor. The mortgage has an interest rate of 7% for 25 years. Use the table to find the associated factor. table factor = This question has several parts that must be completed sequentially. If you skip a part of the question, you will not recei any points for the skipped part, and you will not be able to come back to the skipped part. Tutorial Exercise Find the monthly payment and the total interest for a mortgage of $47,000 at 541% for 40 years. Use this table and give the total interest as your answer. Step 1 Because mortgages run for relatively long periods of time, we can use a special present-value table in which the periods are listed in years to find the monthly payment. The table factors represent the monthly payment required per $1,000 of debt to amortize a mortgage. The monthly payment includes mortgage interest and an amount to reduce the principal. Since the table gives factors in terms of $1,000, the number of $1,000 s financed needs to be found. This is done by dividing the amount financed, the mortgage of $47,000, by $1,000. Find the number of $1,000 s financed. Tutorial Exercise James has a mortgage of $89,500 at 7% for 25 years. The property taxes are $3,400 per year, and the hazard insurance premium is $764.50 per year. Find the monthly PITI payment. Step 1 Recall that PITI is the sum of the principal and interest portion of a mortgage payment, PI, and the tax and insurance portion, TI. monthly PITI = monthly PI+ monthly TI To find the monthly PI, first divide the amount financed, the mortgage, by 1,000 to find the number of $1,000 s financed. Find the number of $1,000 s financed for the given $89,500 mortgage. number of $1,000 s financed =1,000amountfinanced =1,00089,500= The monthly payment of the mortgage will be calculated using the number of $1,000 s financed and a factor from the following table excerpt. Monthly Payments (Necessary to amortize a loan of $1,000 ) To read this table, scan across the top row to find the number of years of the mortgage. Then look down that column to the row corresponding to the interest rate. The value at the intersection of the column and row is the table factor. The mortgage has an interest rate of 7% for 25 years. Use the table to find the associated factor. table factor = This question has several parts that must be completed sequentially. If you skip a part of the question, you will not recei any points for the skipped part, and you will not be able to come back to the skipped part. Tutorial Exercise Find the monthly payment and the total interest for a mortgage of $47,000 at 541% for 40 years. Use this table and give the total interest as your answer. Step 1 Because mortgages run for relatively long periods of time, we can use a special present-value table in which the periods are listed in years to find the monthly payment. The table factors represent the monthly payment required per $1,000 of debt to amortize a mortgage. The monthly payment includes mortgage interest and an amount to reduce the principal. Since the table gives factors in terms of $1,000, the number of $1,000 s financed needs to be found. This is done by dividing the amount financed, the mortgage of $47,000, by $1,000. Find the number of $1,000 s financed
