Question

Erin Thompson agreed to purchase a house for $97,900. Hoover Mortgage is willing to lend her

money at 8 percent for 30 years provided Thompson can make a down payment of $8,000. The
'total closing costs are 3 percent of the amount of the mortgage loan. What are the total closing
costs?
$3,450
$2,697
b. $2,487
d. $2,280
a.

Answer 1

$2,697 is correct :)


$97,900-$8000=$89,900 because down payments are never included with the total mortgage loan.
8 percent for 30 years means there will be 8 percent interest that the bank charges on a 30 year loan that is on a fixed payment per month.
3 percent for closing costs or 0.03•$89,900=$2,697