Some lenders charge an up-front fee on a loan

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Some lenders charge an up-front fee on a loan, which is subtracted from what the borrower receives. This is typically described as "points" (where one point equals 1% of the loan amount). The federal government requires that this be accounted for in the APR that discloses the loan's cost.

(a) If the house is sold after 6 years and the loan is paid off, what is the effective interest rate and the APR?

Reference no: EM13737869

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Subtracted from what the borrower receives : Some lenders charge an up-front fee on a loan, which is subtracted from what the borrower receives. This is typically described as "points" (where one point equals 1% of the loan amount). The federal government requires that this be accounted for in ..

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