Finance
What is 'cost of funds' in mortgage lending?
AThe closing costs the borrower pays to obtain a mortgage
BThe rate at which a lender borrows money to fund mortgage loans, affecting the interest rates they can offer✓ Correct
CThe total cost of the property including financing
DThe appraiser's fee for determining the property's value
Explanation
Cost of funds is the interest rate at which a financial institution borrows money (from deposits, bonds, federal funds) to fund its lending activities. Higher cost of funds generally results in higher mortgage interest rates offered to borrowers.
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