Tom wants to purchase a property for $300,000. He can borrow a 80% LTV fixed-rate loan, with 4.5% annual interest rate and a 2% origination fee and no point. Or, he can borrow a 90% LTV fixed-rate loan, with 5.5% annual interest rate, and a 2% origination fee and no point. Both loans have a 30-year amortization period. 

If he plans to hold the loan till its maturity, what will be the incremental cost of borrowing for him to borrow the additional 10% loan amount?

Answer rating: 100% (QA)

First lets calculate the loan amount for each option For the 80 LTV loan the loan amount would be Lo... View the full answer