Question

A lender estimates that the closing costs on a $165,000 home loan will be $6,187.50. The actual closing costs were 3.5% of the loan amount. Determine if the closing costs were higher or lower than the estimate and by what percent?

Answer 1

lower by 0.25%

Step-by-step explanation:

Answer 2

Home loan amount = $165,000

Estimated closing costs = $6,187.50

% of estimated closing cost = ?

$165,000 * x% = $6,187.50
x% = $6,187.50 ÷ $165,000
x% = 0.0375
x = 0.0375 x 100 = 3.75

Therefore, estimated closing costs = 3.75% of loan amount = 3.75% of $165,000

Actual closing costs = 3.5% of loan amount = 3.5% of $165,000 = $5775

Difference in estimated and actual closing cost percent = 3.75% - 3.5% = 0.25%

The closing costs were lower than the estimate by 0.25%