Finance
The annual percentage rate (APR) on a mortgage is higher than the note rate (interest rate) because:
ALenders are required to add extra profit to the stated rate
BThe APR includes the interest rate plus other loan costs (points, fees), expressed as a yearly rate✓ Correct
CThe APR reflects future interest rate adjustments
DAPR and interest rate are always the same
Explanation
The APR reflects the total cost of the loan including the interest rate plus points, origination fees, and other finance charges, expressed as an annualized percentage of the loan amount. It is always equal to or higher than the note rate.
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