Finance
The annual percentage rate (APR) on a mortgage is higher than the stated interest rate because APR includes:
AThe property tax escrow amount
BThe interest rate plus certain fees and costs of the loan✓ Correct
CHomeowner's insurance premiums
DThe cost of PMI for the life of the loan
Explanation
APR reflects the true cost of borrowing by incorporating the interest rate plus certain fees (origination fees, discount points, etc.), giving borrowers a more accurate basis for comparing loan offers.
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