answer to NUMBER 4 ONLY

A property costs $100,000. 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 he could obtain a 90% loan at an 8.5% interest rate with the same loan term. The borrower plans to own the property for the entire loan term. What is the incremental cost of borrowing the additional funds? Question 3 1 pts How would your answer to #2 change if two points were charged on the 90% loan? Question 4 1 pts How would your answer to #3 (there are still 2 points charged on the 90% loan) change if the borrower planned to own the property for only five years