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You are offered two choices for financing your house, valued at $ 2 0 0 , 0 0 0 , as follows: Required: a .
You are offered two choices for financing your house, valued at $ as follows: Required: a A percent LTV fixedrate year mortgage at percent. It will require private mortgage insurance for nine years until the loan is reduced to percent of value effectively increasing the payment as if the loan were a percent loan for nine years. b An percent LTV first mortgage, fixed rate, years at percent. No mortgage insurance is required because the loan is percent of value. A "piggyback" second mortgage for percent of value of the house, with an effective borrowing cost of percent, and a maturity of nine years is required too. You expect for the financing to be in place for seven years. If there is no difference in the upfront cost of the two arrangements, which would be the better choice financially?
You are offered two choices for financing your house, valued at $ as follows:
Required:
a A percent LTV fixedrate year mortgage at percent. It will require private mortgage insurance for nine years until the loan is reduced to percent of value effectively increasing the payment as if the loan were a percent loan for nine years.
b An percent LTV first mortgage, fixed rate, years at percent. No mortgage insurance is required because the loan is percent of value. A "piggyback" second mortgage for percent of value of the house, with an effective borrowing cost of percent, and a maturity of nine years is required too.
You expect for the financing to be in place for seven years. If there is no difference in the upfront cost of the two arrangements, which would be the better choice financially?
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