Assume an elderly person owns a $$350,000$ home that is free and clear of mortgage debt. A lender has agreed to a $$350,000$ reverse mortgage with monthly payments. TQuestion $37$

Suppose that there is $$2,000$ origination cost associated with the reverse

mortgage and the elderly passes away in $5$ years $(60$ months$),$ what is the annual

effective cost of the loan to the elderly?

$6\%$

$6\mathrm{.}3055\%$

$7\mathrm{.}3055\%$

None of the abovehe loan term is $15$ years. The annual interest rate is $6\%.$