Alabama Real Estate Practice Exam 2025 – All-in-One Guide to Master Your Real Estate License!

A construction mortgage is a type of loan specifically designed to finance the construction of a new building. This means it will cover the costs associated with building materials, labor, and permits. Option A is incorrect because a construction mortgage is not used to purchase pre-existing buildings. Option B is incorrect because a different type of loan, such as a home renovation loan, would be used for that purpose. Option D is incorrect because a construction mortgage is not used to purchase equipment, only to finance the actual construction of a building. Therefore, option C is the only correct answer.