Alender 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%

Option D is correct. The actual closing cost was lower than the estimate by 0.5%

Further Explanation:

Closing cost: when the home loan is taken, the closing cost is charged. It comprises of application fee, attorney fee, closing fee, courier fee, credit report fee, homeowner’s insurance, and lender’s title insurance. The closing costs form the part of loan estimate and closing disclosure.

Calculate whether the estimated closing cost is higher or lower than the actual closing cost:

Difference in closing cost as a percentage of home loans:

Difference in closing cost = Difference in closing stock  ÷ Home loan value

                                          = (1,468 ÷293,600) × 100  

                                          = 0.5%

Therefore, the actual closing cost was lower than the estimate by 0.5%

Working note:

Calculate the actual closing stock:

Actual closing costs = Home loan ÷ Rate of closing stock

                                 = $293,600 ÷ 0.0325

                                 = $9,542

Calculate the difference between actual and estimated stock:

Difference in closing stock = Estimated closing stock – Actual closing stock  

                                          = $11,010 - $9,542

                                          = $1,468

Learn more:

1.Learn more about the collateral loans

2.      Learn more about loaning the money

3.      Learn more about the mortgage payment

Answer details:

Grade: Middle School

Subject: Economics

Chapter: Inflation

Keywords: 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% , higher by 0.5%, lower by 0.25%,  lower by 0.5%.