Finance
Regulation Z (Truth in Lending Act) requires that mortgage advertisements including a specific rate must also disclose:
AOnly the annual percentage rate
BThe APR and other credit terms if a specific rate or payment amount is mentioned✓ Correct
CThe lender's fee schedule
DThe borrower's credit score requirement
Explanation
Regulation Z's triggering terms provisions require that if a mortgage advertisement includes specific terms such as a payment amount, down payment, or interest rate, it must also disclose other key terms including the APR.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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