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%

Answer 1

Estimate as percent = 11,010 / 293,600 = 0.0375 = 3.75%. Actual = 3.25%. The estimate was higher by 3.75% − 3.25% = 0.50%. Answer: b.