Jack and Jill have bought a house for $600,000, and are checking out two mortgage loans:- Loan 1: LTV = 80% fully amortizing 30-year term with end of month payments.Interest Rate = 7.80%.This loan has 2½ points to be paid upfront.It has 1% prepayment penalty if the loan is terminated sooner than 10 years.- Loan 2: LTV = 90% fully amortizing 25-year term with end of month payments.Interest Rate = 8.40%This loan has 2½ points to be paid upfront.It has 1% prepayment penalty if the loan is terminated sooner than 10 years.B. If Jack and Jill sell the house at the end of 9 years what is their incremental cost of borrowing overtheir nine years of home ownership?
