Finance
The Truth in Lending Act (TILA) requires lenders to disclose the Annual Percentage Rate (APR) to mortgage borrowers. The APR differs from the interest rate because:
AThe APR is always lower than the interest rate
BThe APR includes the interest rate plus certain fees and costs of credit expressed as an annual rate, providing a more complete picture of loan costs✓ Correct
CThe APR only applies to adjustable-rate mortgages
DThe APR is set by OREC for Oklahoma transactions
Explanation
The APR reflects the true cost of borrowing by incorporating the interest rate plus points, origination fees, and other finance charges, expressed as an annual percentage. This allows borrowers to compare loan offers more accurately.
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