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The SAFE MLO Test asks why the APR is higher than the note rate, what goes into the finance charge, and whether a changed APR is still accurate. Enter a loan to see all three worked out.
Fixed rate, level monthly payments, no odd first period. Real disclosures follow the creditor's own finance-charge rules, which this does not replace.
The amount financed is the loan minus prepaid finance charges such as discount points and origination fees. The finance charge is the cost of credit: every dollar of interest over the term plus those prepaid charges (12 CFR 1026.4). The APR is the rate at which the monthly payments, discounted back, equal the amount financed (the actuarial method in Regulation Z Appendix J). Because you repay the full loan but only receive the amount financed, the APR comes out above the note rate.
A disclosed APR is accurate if it is within 1/8 of 1 percentage point of the actual APR on a regular loan, or 1/4 point on an irregular one, such as a construction loan with draws (12 CFR 1026.22(a)(2) and (3)). On the Closing Disclosure, an APR that becomes inaccurate restarts the 3-business-day wait.
Treating the tolerance as a percentage of the APR. It is measured in percentage points: 6.875% to 7.000% is a change of exactly 0.125 and still accurate on a regular loan. An adjustable-rate loan with regular payments is still a regular transaction.
More on this in APR tolerance on the NMLS test.
For study and general guidance only, not legal or lending advice. Figures checked 11 Oct 2026 against 12 CFR 1026.22 (Regulation Z), Regulation Z Appendix J and 12 CFR 1026.4 (finance charge). Rules change; confirm with the source before relying on a result.
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The APR spreads prepaid finance charges, such as points and origination fees, over the loan term. You repay the full loan amount but receive only the amount financed, so the effective rate is higher than the note rate.
1/8 of 1 percentage point above or below the actual APR for a regular transaction and 1/4 of 1 percentage point for an irregular one (12 CFR 1026.22(a)(2) and (3)).
Interest plus charges the borrower pays as a condition of the credit, such as discount points, origination fees and mortgage broker fees (12 CFR 1026.4). Some real-estate-related fees, such as title and appraisal fees, are excluded when they are bona fide and reasonable.
Start with the loan amount and subtract the prepaid finance charges. On a $300,000 loan with one point and $1,500 of fees, the amount financed is $295,500.