Finance
The Truth-in-Lending Act requires the Annual Percentage Rate (APR) to be higher than the stated interest rate because the APR includes:
AOnly the principal repayment
BInterest plus most fees (origination, points, mortgage insurance) expressed as an annual rate✓ Correct
COnly prepayment penalties
DThe property tax and insurance
Explanation
APR includes the interest rate plus most loan costs (origination fees, points, MIP/PMI) spread over the loan term, giving borrowers a more complete picture of the true cost of borrowing.
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