Finance
Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) differs from the note rate because the APR:
AReflects only the principal and interest payment
BIncludes certain fees and costs, making it a better indicator of the true cost of borrowing✓ Correct
CIs always lower than the note rate
DIs set by the Federal Reserve
Explanation
The APR includes not just the interest rate but also certain fees (origination fees, mortgage insurance, etc.) spread over the loan term, giving borrowers a more complete picture of the loan's true cost.
Related Iowa Finance Questions
- Iowa's mortgage acceleration clause allows the lender to:
- Iowa's agricultural lenders sometimes use which type of specialized loan for intermediate-term farm equipment and operating expenses?
- Iowa's adjustable-rate mortgage (ARM) caps limit which of the following?
- An Iowa seller who holds a purchase money mortgage acts as:
- RESPA (Real Estate Settlement Procedures Act) prohibits in Iowa mortgage transactions:
- In Iowa, a deficiency judgment after foreclosure allows the lender to:
- In Iowa, which security instrument is most commonly used to secure a mortgage loan?
- Iowa's Home Equity Conversion Mortgage (HECM) reverse mortgage program allows eligible Iowa homeowners to:
Practice More Iowa Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Iowa Quiz →