Multiple Choice
Ms.Madison has an existing loan with payments of $782.34.The interest rate on the loan is 10.5% and the remaining loan term is 10 years.The current balance of the loan is $57,978.99.The home is now worth $120,000 and Ms.Madison would like to borrow an additional $30,000 through a wraparound loan which would increase the debt to $87,978.99.Terms of the wraparound loan are 12.25% interest with monthly payments for 10 years.What is the incremental cost of borrowing the extra $30,000 through a wraparound loan?
A) 15.47%
B) 11.38%
C) 12.96%
D) 13.41%
Correct Answer:
Verified
Correct Answer:
Verified
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