Jim has an annual income $240,000. jim is looking to buy a house that is selling for $400,000 is a very desirable area, sought after by buyers. He applies for a loan at the bank and is approved for fully amortizing 30 years FRM at an annual rate of 3.40%, with monthly payments, compounded monthly. The bank will not lend more than 80% LTV. The payments, compounded monthly. The bank will not lend more than 80% LTV. The appraisal indicates the house is worth more than $375,000. Jim does not PMI. 1. What is the biggest mortgage Jim can get? 2.What will his monthly payment be? Jim decides to shop around more and finds option #2 - a bank willing to give him a 90% LTV mortgage based upon the $375,000 appraised value at an interest rate of 3.65%. 3. What is the additional amount he can borrow? 4. over the life of the loan, what are the total payments he will make, including the down payment, for option #2? 5.What is the total cost of the incremental amount borrowed for option #2? 6. What is the effective interest rate for the additional amount borrowed under option #2?