Part 1 You are buying a $450,000 home and are deciding between two fixed rate mortgage options. The 80% LTV option has an interest rate of 8% over 30 years. The 90% LTV option has an interest rate of 8.5% over 30 years with 2 discount points. - What is the incremental borrowing cost when choosing the 90% LTV option over the 80% LTV option? - Why is the effective borrowing cost higher for the 90% LTV option? Don't just provide an interest rate. Your answer should explain why the interest rate would be higher when considering overall risk and return to the lender