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Calvin’s current monthly mortgage payment is $ 1,580. Thirty percent of the payment is put into an escrow account to pay taxes and insurance. The rest of the money is used to pay his adjustable rate mortgage loan. Next year, the amount Calvin pays towards his loan will increase by 6.5%. What will his total new monthly mortgage payment be? (Assume that taxes and insurance payments will remain unchanged.)

1 Thought on Calvin’s current monthly mortgage payment is $1,580. Thirty percent of the payment is put into an escrow accou?
  1. Reply
    JKRB
    February 7, 2014 at 3:13 pm

    1,580 / 1.30 = 1,215.38 Present amount going towards mortgage payment. That leaves 364.62 going towards taxes and insurance. So if the actual mortgage amount increases by 6.5%:
    1,215.38 x 1.065 = 1,294.38 New amount going towards mortgage payment.
    1,294.38 + 364.62 = $ 1,659 Total new monthly mortgage payment.

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