Question

A lender estimates that the closing costs on a $170,000 home loan will be $6,375.00. The actual closing costs were 4.0%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 6.25%.

Step-by-step explanation:

The estimated closing costs on a $170,000 home loan is $6,375.00.

The actual closing costs were 4.0% of the loan amount. To determine if the closing costs were higher or lower than the estimate, we can compare the actual amount to the estimated amount.

4% of $170,000 = $6,800.

Since $6,375 is lower than $6,800, the closing costs were lower than the estimate.

To calculate the percentage difference, we can use the formula:

(Actual amount - Estimated amount) / Estimated amount x 100%

(6,375 - 6,800) / 6,800 x 100%

-425 / 6,800 x 100%

-0.0625 x 100%

-6.25%

The closing costs were lower than the estimate by 6.25%.

Answer 2

(a) higher by 0.25%

Step-by-step explanation:

The error in the estimate is found by comparing the estimated rate to the actual rate.

__

The rate of estimated closing costs is ...

(estimated cost)/(home cost) × 100% = 6375/170000×100% = 3.75%

The actual rate is 4.00%.

actual - estimate = 4.00% -3.75% = 0.25%

The actual closing costs were higher than the estimate by 0.25%.