Finance
What is the 'annual percentage rate' (APR) and how does it differ from the note rate (interest rate) on an Illinois mortgage?
AAPR and interest rate are the same thing with different names
BAPR includes the interest rate plus certain loan costs (points, fees) expressed as an annualized rate, making it higher than the note rate and useful for comparing loan costs✓ Correct
CAPR is the rate charged only in the first year; the note rate applies thereafter
DAPR is set by the Illinois Department of Financial Institutions; the note rate is set by the federal government
Explanation
The APR (Annual Percentage Rate) is a broader measure of borrowing costs than the note rate. It includes the interest rate plus certain loan costs (origination fees, points, mortgage insurance premiums) expressed as an annualized rate. Because APR includes these additional costs, it is typically higher than the note rate. TILA requires lenders to disclose APR on all covered mortgage loans, allowing borrowers to compare the true cost of different loan offers.
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