Question

Lending institutions often charge fees for mortgages. One type of fee consists of closing costs. Closing costs are comprised of a fixed fee and a loan origination fee or points, which is a fixed percentage of the mortgage. For one financial institution, the closing costs for a $200,000 mortgage are $4,199 and the closing costs for a $375,000 mortgage are $7,699. (Hint: we saw problems similar to this where the data appears in a table.) Find a formula for C, the closing costs, as a linear function of the amount of the mortgage, m. Explain the meaning of the slope in the context of the problem. Explain the meaning of the vertical intercept in the context of the problem.

Answer 1