A growing equity mortgage (GEM) is characterized by:
Why Payments that increase over time, with the extra amount applied directly to principal Is Correct
Answer B: Payments that increase over time, with the extra amount applied directly to principal
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related Alabama Questions
- A buyer obtains a $180,000 mortgage at 7% for 30 years. The monthly payment factor is $6.65 per $1,000 borrowed. What is the monthly principal and interest payment?Real Estate Math
- A mortgage of $150,000 at 7% annual interest has a monthly payment of $998. How much of the first payment is principal?Real Estate Math
- A $220,000 loan has a monthly payment of $1,319. After the first payment, the remaining balance is $219,731. How much principal was paid in the first month?Real Estate Math
- An investor buys a building for $500,000 with a 25% down payment. What is the loan amount?Real Estate Math
- In Alabama, what instrument is primarily used to secure a mortgage loan with real property as collateral?Finance
- What is the primary purpose of discount points on an Alabama mortgage loan?Finance
- Under Alabama mortgage law, a lender's right to demand full loan repayment if the property is sold is called a(n):Finance
- Private mortgage insurance (PMI) is typically required in Alabama when the borrower's down payment is less than:Finance
Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →