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

Answer:

  (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%.