General Mortgage KnowledgeQuestion 118 of 400
Why is the annual percentage rate (APR) usually higher than the note rate on the same loan?
a.It excludes interest
b.It includes certain finance charges and fees, not just interest
c.It is set by the state
d.It ignores the loan term
Explanation
APR reflects the note interest plus certain finance charges (points, some fees) expressed as a yearly rate, so it is typically higher than the note rate. It does not exclude interest, is not set by the state, and does account for the loan term.
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