Alabama Real Estate Practice Exam

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What does a mortgage in real estate signify?

A contract for leasing property
The valuation method for commercial properties
A promise to repay a loan secured by the property
The calculation of property taxes

The correct answer is: A promise to repay a loan secured by the property

A mortgage in real estate signifies a promise to the lender that the borrower will repay the loan that is taken out to purchase the property. It is different from a contract for leasing property because a mortgage is a loan, while a lease is a rental agreement. It is also different from the valuation method for commercial properties because a mortgage is a financial agreement, while valuation is the process of determining the value of a property. Additionally, a mortgage does not involve the calculation of property taxes, which is a separate process for determining the amount of taxes owed on a property.