A seller is offering a house for sale for $200,000 with an assumable loan with 20 years left of term and a payment of $959 per month and current balance of $133,897. The buyer can make a 15% down payment. A second mortgage can be obtained for the balance of the purchase price at a rate of 12% for 20 years and a payment of $398 per month. What is the effective cost of the combined loans and should the buyer instead refinance with a first mortgage at a rate of 8% for the full amount? 7.4% - Don't refinance 8.8\% - Don't refinance 8.8% - Refinance 7.4% - Refinance