Question

Susan is paying $0.30 per $100 on her $483,000 home in homeowners insurance annually. If her annual homeowners insurance premium is divided into twelve equal monthly installments to be included on each of her monthly mortgage payments of $2128.00, what is her total monthly payment?
a.
$2,248.75
b.
$2,409.75
c.
$3,381.00
d.
$3,577.00

Answer 1

To determine Susan's total monthly payment, we first need to calculate her annual homeowners insurance premium and then find out how much she will pay monthly.

1. **Calculate the annual homeowners insurance premium:**

The cost of homeowners insurance is $0.30 per $100 of the home's value.

\[
\text{Home Value} = \$483,000
\]
\[
\text{Insurance Cost per } \$100 = \$0.30
\]
\[
\text{Number of } \$100s \text{ in } \$483,000 = \frac{483,000}{100} = 4830
\]
\[
\text{Annual Premium} = 4830 \times 0.30 = \$1,449.00
\]

2. **Calculate the monthly insurance premium:**

\[
\text{Monthly Insurance Premium} = \frac{1,449.00}{12} \approx \$120.75
\]

3. **Calculate the total monthly payment:**

The total monthly payment includes the mortgage payment and the monthly insurance premium.

\[
\text{Monthly Mortgage Payment} = \$2,128.00
\]
\[
\text{Total Monthly Payment} = 2,128.00 + 120.75 \approx \$2,248.75
\]

Thus, the total monthly payment is:

**a. $2,248.75**