Question: When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 3% with monthly payments of

When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 3% with monthly payments of $552.47 for 15 years. The second loan is 90% loan at 4% with monthly payments of $475.05 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term?

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