Your lending institution charges $5,500 for closing costs on a $245,000 loan with an APR of 9.5% compounded monthly, with a term of 25 years. The bank will not allow the closing costs to be added to the $245,000 borrowed. What effect do the closing costs have on the effective annual interest rate? Loan amount Closing costs APR n (months) interest/month Payments "True" amount borrowed True rate Effective annual (APY) APR $245,000 $5,500 9.5% (Note: the true APY is 9.925%