If kelsey would like to compare this financing alternative


Bud is offering a house for sale for $180,000 with an assumable loan which was made 5 years ago for $140,000 at 8.75% over 30 years. Kelsey is interested in buying the property and can make $20,000 down payment. A second mortgage can be obtained for the balance at 12.5% for 25 years. What is the effective cost of the combined loans, if Kelsey would like to compare this financing alternative to obtaining a first mortgage for the full amount?

9.04%

9.39%

10.63%

11.27%

please show steps on how to calculate.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: If kelsey would like to compare this financing alternative
Reference No:- TGS02292792

Expected delivery within 24 Hours