Mortgage Loan Originator (MLO) Licensing Practice Test 2025 - Free MLO Practice Questions and Study Guide

The term that refers to the cost of borrowing money is the finance charge. This encompasses all the costs associated with obtaining a loan, including interest, fees, and other charges that the borrower must pay over the life of the loan. The finance charge is a crucial figure to understand as it provides borrowers with a comprehensive view of what they will actually pay to borrow money, allowing them to better compare loans and make informed financial decisions.

Other charges typically refer to specific ancillary fees beyond the interest that might be associated with the loan, but they do not represent the total cost of borrowing.

Payment terms describe the specifics of how a loan will be repaid, including the schedule of payments and the duration of the loan, but they do not explicitly indicate the cost of borrowing.

Discount points are a method to lower the interest rate on a loan by paying upfront. While they do relate to the cost of borrowing, they are not the total cost itself but rather a component that can affect the overall finance charge depending on how the loan is structured.