Question

Tom Henderson takes out a $120,000 mortgage. He paid 1.6% of the loan amount in closing costs and $8,962.49 in total interest the first year of the loan.

What are Tom's closing costs? $
If the APR is (interest for one year plus closing costs) ÷ (amount financed), what was the APR for that year? %
If the APR is (interest only for one year) ÷ (amount financed), what was the APR (to the nearest tenth) for that year? %

Answer 1

120,000×0.016=1,920
(1,920+8,962.49)÷120,000)*100=9%
(8,962.49÷120,000)*100=7%

Answer 2

Hi there!

What are Tom's closing costs? $1920
If the APR is (interest for one year plus closing costs) ÷ (amount financed), what was the APR for that year? 9.1%
If the APR is (interest only for one year) ÷ (amount financed), what was the APR (to the nearest tenth) for that year? 7.5%

Your friend, ASIAX