Alabama Real Estate Practice Exam

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Master your Alabama real estate exam with our comprehensive practice test. Tailored feedback, expert tips, and up-to-date questions to ensure your success!

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What feature defines an open mortgage?

Fixed interest rate
Ability to prepay at anytime without penalty
Restriction on early payment
Compound interest applied

The correct answer is: Ability to prepay at anytime without penalty

An open mortgage is a type of mortgage that allows borrowers to make additional payments or prepay the mortgage at any time without facing a penalty. This means that the borrower has the flexibility to pay off their mortgage faster if they choose to without incurring any extra fees. Option A, fixed interest rate, is a common feature of many mortgages, and does not specifically define an open mortgage. Option C, restriction on early payment, would be the opposite of an open mortgage as it limits the borrower's ability to make early payments. Option D, compound interest applied, refers to the method of calculating interest on a loan and does not pertain to the specific features of an open mortgage. Therefore, option B is the best answer as it accurately defines the key feature of an open mortgage.