Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

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!

Practice this question and more.

What describes a conforming mortgage's relation to Fannie Mae or Freddie Mac?

Cannot be guaranteed
Meets their standards and can be guaranteed
Exceeds their maximum limits
Is primarily for VA-insured loans

The correct answer is: Meets their standards and can be guaranteed

A conforming mortgage means that the mortgage loan meets the standards set by Fannie Mae and Freddie Mac. These agencies purchase mortgages from lenders, which allows lenders to have more money to lend out to other borrowers. A conforming mortgage guarantees that the loan will be eligible for purchase by Fannie Mae or Freddie Mac, providing the lender with more security and liquidity. Option A is incorrect because a conforming mortgage can be guaranteed by Fannie Mae or Freddie Mac. Option C is incorrect because a conforming mortgage must not exceed Fannie Mae or Freddie Mac's maximum limits. Option D is incorrect because a conforming mortgage is not limited to VA-insured loans.