Finance
The Truth in Lending Act (TILA) requires lenders to disclose the Annual Percentage Rate (APR) to borrowers. The APR differs from the interest rate because it includes:
AOnly the principal and interest payment
BCertain fees and costs of credit expressed as a yearly rate✓ Correct
CThe property tax and insurance costs
DOnly the origination fee
Explanation
The APR includes the interest rate plus certain fees (origination fees, points, mortgage broker fees, etc.) expressed as a yearly rate, giving borrowers a more complete picture of the cost of credit. TILA requires lenders to disclose the APR so consumers can comparison shop.
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