The annual percentage rate (APR) on a mortgage is HIGHER than the stated interest rate because APR includes:
Why Additional loan costs such as origination fees, discount points, and mortgage insurance Is Correct
Answer B: Additional loan costs such as origination fees, discount points, and mortgage insurance
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
People Also Study
Related North Carolina Questions
- Which federal law requires lenders to disclose the Annual Percentage Rate (APR) to borrowers?Finance
- Regulation Z (Truth in Lending) requires that the APR (Annual Percentage Rate) in a mortgage advertisement is triggered when a lender advertises which specific credit term?Finance
- Under NC's NC Offer to Purchase, who is responsible for paying the buyer's closing costs (loan origination fees, title insurance, etc.) by default?Contracts
- Which type of mortgage allows the borrower to pay only interest during the loan term, with the full principal due at maturity?Finance
- A buyer secures a 30-year fixed mortgage on a $350,000 NC home with 10% down at 7% annual interest. The loan amount is:Real Estate Math
- A homebuyer receives a Loan Estimate and notices the origination charges are significantly higher than what the lender verbally quoted. Under TRID, which fees are subject to a 0% tolerance (cannot increase at closing)?Finance
- A buyer in NC makes a 20% down payment on a $375,000 home. The lender charges 1.5 origination points on the loan. How much are the origination fees?Real Estate Math
- A buyer's loan balance is $180,000 at 7% annual interest. What is the first month's interest payment?Real Estate Math
Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
Study This Topic
Practice More North Carolina Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free North Carolina Quiz →