A lender estimates that the closing costs on a $312,500 home loan will be $12,500. The actual closing costs were 4.25% of the loan amount. Determine if the closing costs were higher or lower than the estimate and by what percent.

The estimated cost is $12,500 ÷ $312,500 = 0.04, or 4% of the loan. The actual cost rate, 4.25%, is 0.25 percentage points higher than the estimate, so the matching choice is “higher by 0.25%.”

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