Question

In many cases, lenders allow homeowners to include their homeowners insurance premium with their monthly mortgage payment. Tim’s home is worth $279,500. If his homeowners insurance premium is $0. 33 per $100, how much is added to his monthly mortgage payment for insurance? a. $7. 69 b. $76. 86 c. $92. 35 d. $922. 35 Please select the best answer from the choices provided A B C D.

Answer 1

The monthly mortgage payment for insurance is $76.86. Option B shows the correct payment for insurance.

How do you calculate the monthly mortgage payment for insurance?

Given that Tim’s home is worth $279,500 and his homeowners insurance premium is $0.33 per $100.

The premium is on yearly basis. Then, the premium for a month is given as,

1 month premium on $100 = $\dfrac {\ 0.33 }{12}$

1 month premium on $100 = $0.0275

1 month premium on $1 = $\dfrac {\ 0.0275}{100}$

Now the premium is,

1 month premium on $279500 = $\dfrac {\ 0.0275}{100} \times \ 279500$

1 month premium on $279500 = $76.86

Hence we can conclude that the monthly mortgage payment for insurance is $76.86. Option B shows the correct payment for insurance.

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