1. In many cases, lenders allow homeowners to include their homeowner's

insurance premium with their monthly mortgage payment. Sam's home is worth

$289,500. If his homeowner's insurance premium is $0.30 per $100, how much is

added to his monthly mortgage payment for insurance?

A. 7.23

B. 72.38

C. 86.85

D. 868.50

Question

Mathematics

Guest

1 May, 05:12

1. In many cases, lenders allow homeowners to include their homeowner's

insurance premium with their monthly mortgage payment. Sam's home is worth

$289,500. If his homeowner's insurance premium is $0.30 per $100, how much is

added to his monthly mortgage payment for insurance?

A. 7.23

B. 72.38

C. 86.85

D. 868.50

+1

Answers (1)

Know the Answer?

Clara Preston · Answer 1

B. 72.38

Step-by-step explanation:

Generally, mortgage insurance premium is paid by a borrower who have made a down payment of less than 20% on the home loan. It is paid by the borrower but it is mostly used to protect the lender from losses in case the borrower defaults on the loan. In order to determine the rate, we just need to multiply the values of the loan with the rate of insurance. Therefore, for the given problem, we have:

mortgage payment for insurance = 0.3*289500/100 = $868.5 per year.

To calculate the monthly mortgage, we divide the annual payment by 12.

Thus: monthly mortgage payment for insurance = $868.5/12 = $72.38