When must the APR be re-disclosed on a loan?

The correct answer is based on the requirement set forth in the Truth in Lending Act (TILA). Specifically, the APR must be re-disclosed if it varies by more than one eighth of 1% from the initial disclosure. This rule is in place to ensure that borrowers have accurate and timely information regarding the cost of credit, allowing them to make informed decisions about their loans.

The threshold of one eighth of 1% is significant because it reflects the law's intent to protect consumers from unexpected increases in the cost of borrowing. If the APR increases beyond this threshold, it is crucial for lenders to notify borrowers, ensuring transparency and fostering trust in the lending process.

Understanding this requirement is important for loan officers and mortgage professionals, as it helps them comply with federal regulations while also serving the best interests of their clients.