Colibri Real Estate 30-Hour Alabama Post License Practice Exam

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Boost your real estate career in Alabama with the Colibri Real Estate 30-Hour Post License Exam. Prepare thoroughly with simulated quizzes, including multiple choice questions and detailed insights to ace the test and advance your professional journey.

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What is the term for frequent refinancing of a mortgage with no economic benefit to the borrower?

Loan modification
Loan assumptions
Loan flipping
Debt restructuring

The correct answer is: Loan flipping

The term for frequent refinancing of a mortgage that provides no economic benefit to the borrower is known as loan flipping. This practice typically involves the borrower being encouraged or pressured to refinance their mortgage repeatedly, often resulting in additional fees and costs without any significant improvements in the loan terms, such as lower interest rates or better payment structures. Loan flipping can lead to a cycle of debt where the borrower may find themselves in a worse financial position due to accruing fees associated with each refinancing. This practice is generally viewed unfavorably as it may take advantage of borrowers who are not fully aware of the financial implications. Understanding this term is crucial in recognizing predatory lending practices and ensuring borrowers make informed decisions regarding their mortgage options.