California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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What role does a mortgage serve in a loan situation?

It determines the interest rate
It acts as the security instrument for the loan
It legally transfers ownership
It is a witness document

The correct answer is: It acts as the security instrument for the loan

A mortgage serves as the security instrument for a loan, meaning that it provides collateral for the lender in case the borrower defaults on the loan. While interest rate and ownership may be involved in the process of obtaining a mortgage, they are not the primary purpose of a mortgage in a loan situation. A witness document is typically unrelated to mortgages and loans.