This is the solution, but im having trouble understanding the variables and calculations. please help me understand how to read the solution.

You have saved $75,000 to buy a $750,000 home. When you go to find possible financing options a lender offers you $500,000 fully amortized 15 year first mortgage with an annual interest rate of 4.5% compounded monthly and a $175,000 second mortgage amortized over 15 years with an annual interest rate of 10% compounded monthly. What is the effective interest rate on the total loan package from the lender?

Step 1: 2 Loans; Find PMTS

a)

i = 4.5/12

n =15 x 12

PMT = -3824.97

PV = 500k

b)

i = 10/12

n = 15x12

PMT = -1990.5

PV = 175k

FV =

Find total "i" rate

i = .5 x 12 = 6.02%

n = 15 x 12

PMT = -5705 (add up both PMTS) make sure to use "-"

PV = 675k (add up PVs)

FV =