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Mortgage Agent Licensing Practice Exam · Question

The 'cost of borrowing' for a mortgage includes:

The 'cost of borrowing' is a comprehensive measure that includes not only the interest paid but also any fees, charges, or other costs that the borrower incurs

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Question: The 'cost of borrowing' for a mortgage includes:

Answer options:

  • Only the principal amount repaid.
  • Only the interest paid over the term of the mortgage. ✅ All interest, fees, and charges paid by the borrower to obtain and maintain the mortgage.
  • Only the legal fees and appraisal costs.

Correct answer: All interest, fees, and charges paid by the borrower to obtain and maintain the mortgage.

Explanation: The 'cost of borrowing' is a comprehensive measure that includes not only the interest paid but also any fees, charges, or other costs that the borrower incurs to obtain and maintain the mortgage throughout its lifespan.

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