Finance
A lender who charges an interest rate of 6.5% on a mortgage and the APR is 6.9% means:
AThe difference represents a penalty fee
BThe APR includes fees and costs in addition to interest, making the true cost higher than the note rate✓ Correct
CThe lender made a calculation error
DThe borrower will pay 6.9% interest on the loan
Explanation
The APR (Annual Percentage Rate) reflects the true cost of credit including the note rate plus fees (origination points, mortgage insurance, etc.), which is why the APR is higher than the stated interest rate.
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