Ontario Mortgage Agent Practice Exam

How should the cost of borrowing be expressed in a borrower disclosure form?

1. As a monthly installment amount

2. As a total amount due at closing

3. As an annual percentage rate

4. As a flat fee

The correct answer is: As an annual percentage rate

The cost of borrowing should be expressed as an annual percentage rate in a borrower disclosure form. This is because the annual percentage rate (APR) includes not only the interest rate, but also any other fees and charges associated with the loan. Expressing the cost as a monthly installment amount (option A) or a total amount due at closing (option B) may not give an accurate representation of the true cost of borrowing. Option D, expressing the cost as a flat fee, also does not take into account any interest or additional fees. Therefore, the best and most comprehensive way to express the cost of borrowing in a borrower disclosure form is by using the annual percentage rate.