You have selected the lender you will be using and completed the application process. You are excited to find out that your credit score was better than you originally thought when estimating how much you could spend on a house. You are being offered a lower interest rate than you were originally quoted on two different loan options. Both are 30 year, fixed rate mortgages with payments of $1,000 per month and origination fees equal to 2% of the loan amount.* hints (1) Assume these loans have zero PMI (2) you have additional money set aside to cover closing costs so you are using the full amount from #2 as a down payment.

Loan A has an APR of 4% with no points.

Loan B has an APR of 3.90% with 1.5 points.

5. What is your Effective borrowing cost if you select Loan A? Enter your answer as a whole number with 3 decimal points (no percent sign).

6. What is your Effective borrowing cost if you select Loan B? Enter your answer as a whole number with 3 decimal points (no percent sign)