What is typically not included in the calculation of a loan's Annual Percentage Rate (APR)?

The Annual Percentage Rate (APR) is a crucial measure that reflects the total cost of borrowing, expressed as a yearly interest rate. It encompasses not only the nominal interest rate on the loan but also other costs associated with obtaining the loan that are financed into the mortgage.

The correct answer highlights that property tax rates are typically not included in the calculation of a loan's APR. This is because the APR is focused on the costs and fees directly associated with the financing of the loan, such as the interest rate and various closing costs. Property taxes, on the other hand, are separate from the loan costs and are usually the responsibility of the borrower as an ongoing expense, rather than being part of the borrowing cost itself.

Interest rates and financed closing costs are included in the APR, as they directly affect the cost of borrowing. Loan processing fees are also included since they contribute to the overall cost of servicing the loan. Thus, while these fees and rates form part of the financial implications of taking out a loan, property tax rates exist outside the scope of APR calculations.