Finance
The annual percentage rate (APR) on a Minnesota mortgage is higher than the interest rate because:
AThe APR includes the property tax and insurance
BThe APR reflects the true cost of borrowing, including the interest rate plus points, fees, and other loan costs✓ Correct
CThe APR is calculated on a daily rather than annual basis
DThe APR includes the PMI premium
Explanation
The APR is a broader measure of borrowing cost that includes the interest rate plus origination fees, discount points, mortgage insurance, and other finance charges. TILA requires lenders to disclose the APR so borrowers can compare the true cost of loans with different rate/fee structures.
Related Minnesota Finance Questions
- A 'due on sale' clause in a Minnesota mortgage requires:
- In Minnesota, which of the following is a 'non-recourse' mortgage?
- Which Minnesota program provides down payment and closing cost assistance to first-time homebuyers through Start Up loans?
- In Minnesota, 'mortgage escrow' (impound account) collects monthly amounts for:
- A Minnesota homeowner takes out a home equity line of credit (HELOC). A HELOC differs from a home equity loan because:
- Minnesota's Open Mortgage law permits homeowners to:
- A Minnesota homebuyer is purchasing their first home for $250,000 and has excellent credit. Which loan type would likely offer the lowest interest rate?
- A Minnesota buyer's debt-to-income ratio exceeds conventional loan limits. Which loan program might allow this buyer to qualify with a higher DTI?
Practice More Minnesota Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Minnesota Quiz →