You have decided to buy a house. The price will be $500,000 and you will put $50,000 down. Your annual interest rate will be 6% and the loan calls for monthly payments for 30 years. You also know that your loan payment will include monthly escrow collected by your lender to cover property taxes, property insurance, and private mortgage insurance (PMI) that the bank will make you pay because you are not making a 20% down payment. The annual cost of property taxes will be $4,000. The annual cost of property insurance will be $2,000. The annual cost of PMI will be $3,000. What will your total monthly payment be

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.