Finance
In Louisiana, the 'note rate' on a 30-year fixed mortgage is 6.5% and the APR is 6.78%. The difference represents:
ALouisiana's state tax on mortgage interest
BThe additional cost of loan origination fees, mortgage insurance, and other finance charges spread over the loan term✓ Correct
CThe lender's profit margin on the loan
DThe difference between the prime rate and the loan rate
Explanation
The difference between the note rate and APR reflects the additional cost of upfront fees (origination fees, points, mortgage insurance) that are part of the loan's total cost — expressed as a higher annual rate when spread over the loan term.
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