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!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is the primary benefit of a growing equity mortgage (GEM)?

Lower initial payments
Quicker payoff of the loan and saving on interest
Easier qualification requirements
Fixed interest rate for the life of the loan

The correct answer is: Quicker payoff of the loan and saving on interest

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.