What will be the total monthly payment for PITI if a $250,000 mortgage at 7% incurs $5,000 taxes and $3,000 insurance annually?

To determine the total monthly payment for Principal, Interest, Taxes, and Insurance (PITI), we first need to calculate the monthly payment for the mortgage principal and interest.

With a mortgage amount of $250,000 at an interest rate of 7%, we can use the mortgage payment formula:

M = P[r(1 + r)^n] / [(1 + r)^n – 1]

Here:

• M = monthly payment

• P = loan amount ($250,000)

• r = monthly interest rate (annual rate / 12)

• n = number of payments (loan term in months, typically 30 years * 12 months)

Calculating the monthly interest rate:

7% annual rate = 0.07 / 12 = 0.00583333

For a 30-year mortgage:

n = 30 * 12 = 360

Now plug the values into the formula:

M = 250,000[0.00583333(1 + 0.00583333)^360] / [(1 + 0.00583333)^360 – 1]

Calculating this gives us a monthly principal and interest payment of approximately $1,670.49.

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