Finance
The annual percentage rate (APR) on a mortgage loan is higher than the stated interest rate because it:
AIncludes the lender's profit margin
BReflects the true cost of borrowing including fees, points, and other finance charges✓ Correct
CAdjusts for inflation expectations
DIs required by Utah state law to be artificially higher
Explanation
APR is broader than the note rate because it incorporates the interest rate plus loan origination fees, points, mortgage insurance, and other finance charges. It provides consumers a standardized way to compare the true cost of different loan offers.
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