Question

lender estimates that the closing costs on a $165,000 home loan will be $6,187.50. The actual closing costs were 3.5% 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

Actual closing cost = 165,000(0.035) = $5,775. Estimate − actual = 6,187.50 − 5,775 = $412.50, and 412.50/165,000 = 0.0025 = 0.25%. So the actual was lower by 0.25% — answer c.