Question

A lender estimates that the closing costs on a $293,600 home loan will be $11,010. 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? a. higher by 0.25% b. higher by 0.5% c. lower by 0.25% d. lower by 0.5% Please select the best answer from the choices provided

Answer 1

D. Lower by 0.5%

Step-by-step explanation:

Given that

Estimated closing cost = 11010

Home loan = 293600

Actual closing cost = 3.25%

Therefore,

Actual closing cost

= 293600 × 3.25%

= 293600 × 0.0325

= $9542

The difference between actual and estimated closing cost

= 11010 - 9542

= $1468

Expressed in % of the whole

= 1468/293600 × 100

= 0.005 × 100

= 0.5%

Thus, actual closing cost was lower by the estimated closing cost by 0.5%

Answer 2

We choose D

Step-by-step explanation:

Given that:

• Home loan: $293,600
• Estimated cost: $11,010
• The actual closing costs were 3.25%/ home loan.

From the given information, we need to find out the actual closing costs

= Home loan ÷ Rate of closing stock

= $293,600 ÷ 0.0325

= $9,542

The difference of the actual and the estimate is:

= Estimated cost - actual closing costs

= $11,010 - $9,542

= $1,468

The percentage of difference :

$1,468 /$293,60*100%

= 0.5%

We choose D