Question

A lender estimates that the closing costs on a $220,400 home loan will be $6,612. The actual closing costs were 3.25% of the loan amount. Determine if the closing costs were higher or
lower than the estimate and by what percent?
higher by 0.25%
higher by 0.5%
lower by 0.25%
lower by 0.5%

Answer 1

The closing costs were lower than the estimate by 0.25%.

Calculus

Given that a lender estimates that the closing costs on a $220,400 home loan will be $6,612, and the actual closing costs were 3.25% of the loan amount, to determine if the closing costs were higher or lower than the estimate and by what percent should perform the following calculation should be done:

• 220400 = 100
• 6612=X
• 6612 x 100 / 220400 = X
• 661200 / 220400 = X
• 3 = X

Therefore, the closing costs were lower than the estimate by 0.25%.

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