If you buy a two-bedroom, one-bathroom condominium for $600,000 in Los Angeles, California to be used as a rental property on Airbnb with a 90% LTV fully amortizing 30-year first mortgage loan at a 6.75% fixed annual interest rate from Bank of America, and if the promissory note documenting the loan includes a 1% prepayment penalty clause, which of the following will be TRUE regarding the APR on the loan: -The APR will be higher than the effective yield to the lender if the loan is refinanced before the maturity date -The APR will be lower than the contract interest rate if the lender charges one point at loan closing and $500 for an appraisal -The APR will be lower than the effective yield to the lender if the loan is paid off before the maturity date -The APR will be higher than the contract interest rate if the loan has no points and no closing costs

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Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.