1st Mortgage Residential

When an individual wants to buy a property, they may decide to finance the purchase with a loan from a lending institution. The lender expects the home loan or mortgage to be repaid in monthly installments which include a portion of the principal and interest payments. The lender will have a lien on the property since the loan is secured by the home. This mortgage taken out by a homebuyer to purchase the home is known as the first mortgage.
The first mortgage is the original loan taken out on a property. The homebuyer could have multiple properties in his or her name; however, it is the original mortgages taken out to secure each of the properties that constitutes a first mortgage. For example, if a property owner takes out a mortgage for each of his three homes, each of the three mortgages is a first mortgage.
The term ‘first mortgage’ leads one to understand that there could be other mortgages on a property. A home owner could take out another mortgage, such as a second mortgage, while the original and first mortgage is still in effect. The second mortgage is money borrowed against a home equity to fund other projects and expenditures. However, the second mortgage and any other subsequent mortgages taken out on the same property is subordinate to the first mortgage. This means that the first mortgage is paid before the secondary mortgages are paid.

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