Finance
The annual percentage rate (APR) disclosed in South Dakota mortgage transactions differs from the interest rate in that APR:
AIs always lower than the interest rate
BReflects the total cost of the loan including interest, fees, and certain closing costs expressed as a yearly rate✓ Correct
COnly applies to adjustable-rate mortgages
DIs the rate used to calculate monthly payments
Explanation
The APR is a broader measure of the cost of borrowing that includes the interest rate plus other loan fees and costs (such as points and origination fees), expressed as an annualized percentage. It is typically higher than the stated interest rate and is disclosed under TILA to allow borrowers to compare loan costs.
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