Loan Officer Practice Exam

The annual percentage rate (APR) is a crucial measure used to express the total cost of borrowing over the life of a loan. It is designed to help borrowers understand the true cost of a mortgage or loan by including not only the interest rate but also some additional costs associated with securing the loan.

When calculating the APR, several fees and costs are included to give a comprehensive view of the loan's cost. Broker's origination fees, mortgage insurance premiums, and lender's discount points are all considered because they directly affect the cost of obtaining the loan and are typically paid as part of the loan agreement.

In contrast, the purchaser's title insurance premium is not included in the APR calculation. This premium is related to protecting the buyer against any title issues that may arise regarding the property's ownership and is generally considered a closing cost. Since it does not pertain directly to the costs of securing the loan or the financing structure itself, it does not affect the calculation of the APR. Therefore, the correct answer reflects this understanding of what costs are relevant to APR calculations.