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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 an 85% loan for 30 years at 3.5% interest and 1 point and the second is a 70% loan for 30 years at 2.875% interest and no points. Assuming the loan will be repaid in 5 years, 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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