Alabama Real Estate Practice Exam

A growing equity mortgage (GEM) allows borrowers to make smaller monthly payments in the beginning of the loan term, which then increase over time. This allows for a quicker payoff of the loan and ultimately saves the borrower money on interest. This is the primary benefit and the reason why option B is the correct answer. Option A is incorrect because while it does result in lower initial payments, it also means a longer loan term and ultimately more interest paid. Option C is incorrect because GEMs may still have strict qualification requirements similar to traditional mortgages. Option D is incorrect because GEMs do not typically have a fixed interest rate, as the rate increases as the equity in the property grows.