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A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years.

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A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, she could obtain a 90% loan at an 8.5% rate with the same loan term. Refer to Scenario 1 above. The borrower plans to own the property for the entire loan term. However. now assume that 2 points are charged at origination on the 90% loan. What is the incremental cost of borrowing the additional funds? 13.74% 14.16% 13.07% 14.89% 15.35% A borrower can obtain an 80% loan with an 8% interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, she could obtain a 90% loan at an 8.5% rate with the same loan term. Refer to Scenario 1 above. The borrower plans to own the property for the entire loan term. However. now assume that 2 points are charged at origination on the 90% loan. What is the incremental cost of borrowing the additional funds? 13.74% 14.16% 13.07% 14.89% 15.35%

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