A buyer is reviewing mortgage disclosures and wants to compare the true cost of borrowing. Which of the following statements about APR is accurate EXCEPT?
Correct Answer
D) APR measures only the note interest rate and ignores points and prepaid finance charges
Because this is an EXCEPT question, the correct answer is the one statement that is not accurate. APR does not measure only the note rate; it is intended to reflect a broader cost of credit that includes the interest rate plus certain prepaid finance charges such as points and some fees.
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