Finance
Under the Truth in Lending Act (TILA), what is the Annual Percentage Rate (APR)?
AThe note rate stated on the mortgage
BThe total cost of credit expressed as a yearly rate, including fees and interest✓ Correct
CThe rate of return on the borrower's down payment
DThe rate after adjusting for Oregon property taxes
Explanation
The APR is a broader measure of borrowing cost than the note (nominal) rate. It includes the interest rate plus other loan costs such as origination fees, discount points, and certain closing costs, expressed as a yearly rate. TILA requires lenders to disclose the APR to help borrowers make meaningful comparisons between loan offers.
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