Question

You have your Good Faith Estimate and after your down payment and your fees, your mortgage balance is $175,000. You are approved for a 30 year loan at a 4% rate. Your mortgage provider says your escrow balance will be $150 a month and you do not need PMI. What is your monthly mortgage payment?

Answer 1

Formula sheet

A	B	C	D	E	F	G	H	I	J	K
2
3		Escrow payment will be saparately paid in escrow account to ensure payment of property taxes and insurance.
4		Therefore total monthly mortgage payment will be monthly payment on loan plus the monthly escrow payment.
5
6		Calculation of monthly Payment on Loan Amount:
7		Monthly payment can be calculated using PMT(RATE,NPER,PV,FV,TYPE) function in Excel as follows:
8
9		Given the following data:
10		Loan taken	175000
11		Duration of mortgage	30	Years
12		Interest rate	0.04
13
14		Monthly Payment can be calculated as below:
15		RATE (Montly interst rate):	=D12/12
16		NPER (No of Months):	=D11*12
17		PV (Loan Amount):	=-D10
18		FV	0
19		TYPE	0
20		Monthly Payment	=PMT(D15,D16,D17,D18,D19)	=PMT(D15,D16,D17,D18,D19)
21
22		Hence Monthly Payment on loan is	=D20
23		Monthly escrow payment required	150
24
25		Total monthly mortgage payment	=D22+D23	=D22+D23
26