A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90loan will be repaid in 5 years, what is the incremental cost of borrowing the extra money?

You are buying a new house from a builder for $225,000, financed with a loan of $200,000 at 7% for 30 years from your bank. Alternatively, the builder is offering to "buy down" your mortgage payment on the above $200,000 loan by 50% for the first two years (meaning you will save 50% of the regular monthly payment for the two years), after which time the regular payment will resume. What is the maximum extra price you are willing to pay if you take the builder's buy down finance? Answer: $14,860 Please show how to arrive at this