Alabama Real Estate Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

Question: 1 / 400

What is a straight-term mortgage?

Full payment of loan at the end of term with no interest

Periodic payments of interest followed by a balloon payment at maturity

A straight-term mortgage is typically defined as a loan where the borrower makes interest-only payments throughout the term, with a final balloon payment due at the end. This means that while B is the correct answer, the other options are incorrect because they do not accurately describe a straight-term mortgage. Option A would refer to a balloon mortgage, where the entire loan amount is paid at the end with no periodic payments or interest. Option C describes an amortized loan, where the payments include both principal and interest and are spread out evenly over the term of the loan. Option D could refer to an adjustable-rate mortgage, where the interest rate can change throughout the loan term, but it does not necessarily mean that it is a straight-term mortgage.

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Equal payments of principal and interest

Variable interest rate throughout the loan term

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