When Purchasing a $210,000 House,a Borrower Is Comparing Two Loan

question 16

Multiple Choice

When purchasing a $210,000 house,a borrower is comparing two loan alternatives.The first loan is a 90% loan at 10.5% for 25 years.The second loan is an 85% loan for 9.75% over 15 years.Both have monthly payments and the property is expected to be held over the life of the loan.What is the incremental cost of borrowing the extra money?

• A)20.25%
• B)16.17%
• C)11.36%
• D)12.42%

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