The Annual Percentage Rate (APR) differs from the note rate because the APR:

The Annual Percentage Rate (APR) differs

Multiple choice — select the best answer

AExcludes the interest charged on the loan
BReflects the total cost of credit as a yearly rate, including certain finance charges and fees
CIs always lower than the note rate
DApplies only to adjustable-rate mortgages

✓ Correct answer: B. Reflects the total cost of credit as a yearly rate, including certain finance charges and fees The APR expresses the cost of credit as an annual percentage that folds in interest plus prepaid finance charges (such as certain origination fees and mortgage insurance), so it is typically higher than the note rate.

.q-expl{display:block!important}.q-opt[data-idx="1"]{border-color:#16a34a;background:#f0fdf4}.q-opt[data-idx="1"] .oltr{background:#16a34a;color:#fff}.q-opt{cursor:default!important;pointer-events:none}

Keep practising. Use the free NMLS Mortgage Loan PDF, watch the YouTube walkthrough, or unlock all 10 web questions with timed mock exams.

Free PDF Video walkthrough

Topic: Federal Mortgage Law

← Previous Next → 🎲 Random question ↩ Back to all questions

Keep practising

The Annual Percentage Rate (APR) differs from the note rate because the APR:

Related questions — Federal Mortgage Law

Free practice here. Timed mocks when you are ready.