Questions: Miguel and Sofia are buying a condominium valued at 168,500. They will finance their home at 6.75% interest for 20 years. If their total monthly payment is 1,554.35 and their annual insurance costs 898, calculate the annual property taxes for their condo.

Solution Steps

To calculate the annual property taxes for the condo, we need to determine the portion of the monthly payment that goes towards the mortgage principal and interest. We can use the amortization table to find the monthly payment factor for a 20-year loan at 6.75% interest. Then, we calculate the total annual mortgage payment and subtract the annual insurance cost to find the remaining amount, which represents the annual property taxes.

The total annual mortgage payment is calculated by multiplying the monthly payment by 12: \[ \text{Annual Mortgage Payment} = 1554.35 \times 12 = 18652.20 \]

Using the amortization table, the monthly payment factor for a 20-year loan at 6.75% interest is 7.91. The expected annual mortgage payment can be calculated as: \[ \text{Expected Annual Mortgage Payment} = \left(\frac{168500 \times 7.91}{100}\right) \times 12 = 15984.18 \]

The annual property taxes can be found by subtracting the expected annual mortgage payment and the annual insurance cost from the total annual mortgage payment: \[ \text{Annual Property Taxes} = 18652.20 - 15984.18 - 898 = 1769.02 \]

Final Answer