Finance
In Alaska, the 'annual percentage rate' (APR) is always higher than the stated interest rate because APR includes:
AProperty taxes and insurance
BThe interest rate plus certain fees and prepaid finance charges expressed as a yearly rate✓ Correct
CThe lender's profit margin and overhead costs
DPMI and homeowner's insurance costs
Explanation
APR incorporates the stated interest rate plus certain fees (origination fees, mortgage insurance premiums, etc.) into a single, standardized annual percentage. Since fees are added to the interest cost, the APR is always equal to or higher than the stated interest rate.
Related Alaska Finance Questions
- An adjustable-rate mortgage (ARM) in Alaska that has a '5/1' structure means:
- What is the primary advantage of a 15-year mortgage compared to a 30-year mortgage at the same interest rate?
- An adjustable-rate mortgage (ARM) in Alaska typically includes a 'cap' structure. The periodic cap limits:
- A point paid at closing on a mortgage equals:
- The Truth-in-Lending Act (TILA) requires lenders to disclose the:
- What is the purpose of private mortgage insurance (PMI) on an Alaska conventional loan?
- Which of the following types of income would a lender MOST likely accept when qualifying an Alaska buyer for a mortgage?
- A seller in Alaska carries back a purchase money mortgage. This means:
Practice More Alaska Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →