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A borrower is looking to finance 90% of the purchase price on a house he...

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A borrower is looking to finance 90% of the purchase price on a house he is buying. His lender proposes a two-loan package financing as the follows. But the borrower insists to have one 90% LTV (loan-to-value) mortgage. What should the interest rate be on the 90% loan so that the lender will receive same yield regardless which option the borrower chooses? (Hint: the actual purchase price does no affect the results) 5.48% 6.42%6 6.69% 5.12% A borrower is looking to finance 90% of the purchase price on a house he is buying. His lender proposes a two-loan package financing as the follows. But the borrower insists to have one 90% LTV (loan-to-value) mortgage. What should the interest rate be on the 90% loan so that the lender will receive same yield regardless which option the borrower chooses? (Hint: the actual purchase price does no affect the results) 5.48% 6.42%6 6.69% 5.12%

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