how do i calculate closing costs

Question

Tom Henderson takes out a $120,000 mortgage. He paid 1.6% of the loan amount in closing costs and $8,962.49 in total interest the first year of the loan. What are Tom's closing costs?

Answer 1

Ashley, we have to turn the 1.6% into a decimal by moving the decimal point two spaces away from the percent sign, then multiply by 120,000

 

.016($120,000) = $1920

 

Hope this helps!