Finance
The annual percentage rate (APR) on a loan differs from the interest rate because it includes:
AOnly the principal balance
BThe interest rate plus certain fees and costs✓ Correct
CThe property tax and insurance
DThe lender's profit margin only
Explanation
The APR reflects the true cost of borrowing by including the interest rate plus certain fees such as origination fees, discount points, and mortgage insurance, expressed as a yearly rate. It is required to be disclosed under TILA.
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