My index.html file is locatedvar/www/html/templates/
How do I setup absolute path of my index file to load from this folder?
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You have 2 options, really. You can either modify your vhost config (/etc/apache2/sites-enabled/000-default or default for Ubuntu/Debian, or /etc/http/conf/httpd.conf for Centos/RHEL/Fedora), or create a rewrite. Rewrites are heavier on system load, so I would recommend that you use the vhost modification, if you will never use resources from /var/www/html/, and will only serve content from /var/www/html/templates/
what is your website root? I am guessing /var/www/html
do you want your website root folder to be /var/www/html/templates