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A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assuming the loan will be repaid in 5 years, what is the incremental cost of borrowing the extra money? 13.95% 13.27% O 12.39% O 14.42% (Value of assumable loan) A house is sold with an assumable $156,000 below-market loan at 8.5% for a remaining term of 15 years, Current rates are 9.75% for 15 year mortgages. If the house was actually sold for $240,000 with the loan being assumed. Assuming the buyer will keep the house for 15 years, what is the cash-equivalent value of the house? (That is, how much should the sales price be if the loan cannot be assumed) (Hint: it would be sold for less without the loan assumption) $260,660.40 O $229,010.77 O $250,834.82 O $219,339.60
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