What does PFC stand for?

What does PFC stand for?

• A. Prepaid Finance Charge
• B. Postfinance Cost
• C. Primary Finance Charge
• D. Public Finance Charge

Answer: (A)

In mortgage lending, some charges are paid up front to obtain credit, separate from the amount financed. A prepaid finance charge is exactly that upfront portion of the total finance charges that you pay before or at closing, rather than being rolled into the loan amount. Therefore, the abbreviation PFC stands for Prepaid Finance Charge. This matters for disclosures and the calculation of the APR, since these up-front costs affect the total cost of credit but may not be financed into the loan. The other terms listed aren’t standard terms used to describe up-front financing costs.

In mortgage lending, some charges are paid up front to obtain credit, separate from the amount financed. A prepaid finance charge is exactly that upfront portion of the total finance charges that you pay before or at closing, rather than being rolled into the loan amount. Therefore, the abbreviation PFC stands for Prepaid Finance Charge. This matters for disclosures and the calculation of the APR, since these up-front costs affect the total cost of credit but may not be financed into the loan. The other terms listed aren’t standard terms used to describe up-front financing costs.