Question: Please Solve Using BA II Calculator Strokes Frank wants to purchase a home for $200,000. He doesnt have much cash for a down payment, so

Please Solve Using BA II Calculator Strokes

Frank wants to purchase a home for $200,000. He doesnt have much cash for a down payment, so he is considering getting a 95% LTV (Loan to Value) 30-year mortgage at a rate of 8%. The contract rate on an 80% LTV mortgage would be 7%. What would the incremental cost of financing be for the additional $30,000?

a. Franks girlfriend tells him hes nuts and he should just get the 80% LTV loan and then get a home equity loan at 10%. Is she correct? What would his effective interest rate be over 30 years?

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