For a purchase money mortgage with a loan amount of $400,000, which of the following represents the correct method for calculating the APR?
Correct Answer
C) Calculate the rate that equates the amount financed to the present value of all payments
Under TILA/Regulation Z Section 1026.22, the APR is calculated as the rate that, when applied to the amount financed, yields the present value equal to all scheduled payments. This is done using the actuarial method or United States Rule, not simple division or addition of rates and fees.
Why This Is the Correct Answer
Under TILA/Regulation Z Section 1026.22, the APR is calculated as the rate that, when applied to the amount financed, yields the present value equal to all scheduled payments. This is done using the actuarial method or United States Rule, not simple division or addition of rates and fees.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
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