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A borrower is purchasing a property for $725,000 and can choose between two possible loan alternatives....

A borrower is purchasing a property for $725,000 and can choose between two possible loan alternatives. The first is 85% LTV loan for 30 years at 3.5% interest and 1 point and the second is at 70% LTV loan for 30 years at 2.875% interest and no points. Assuming the loan will be held until maturity, what is the incremental cost of borrowing the extra money?

A) 6.14%

B) 6.7%

C)6.33%

D)7.74%

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jeff jeffy answered 2 years ago
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