What Is a First Mortgage Loan?
Mortgage loan is a type of collateral loan which will be given against your assets or property. It gives all the claims on this property and priority over other property during an event default.
When someone wants to buy a property, they might need financial help from a lender or a bank. In this case, they can mortgage their new property or any old assets to avail their first mortgage loan.
The borrower must repay the mortgage loan through monthly installments which includes both the principal amount and the interest payment.
- To get a loan, the borrower must present a security through a property on which the borrower has the authority to seize if the loan is not paid back – this is called first lien. If you unable to repay the loan on time then the lender or bank will sell your property to recover the loan amount.
- When you take a mortgage loan, you have to sign an agreement where you can find the terms and conditions of the loan. You will also have sign a mortgage where you give the lender lien or security of your property against the loan.
Understanding first and second mortgages
This loan taken by the lender to invest in buying a home is called the first mortgage loan. A lender may have many properties on his or her name but he or she will give the original mortgage to secure other properties and this is known as first mortgage.
If the borrower has more than one mortgage then he has to pay for the mortgage before paying for second and third mortgages.
- A person who is taking financial help to own a property via first mortgage doesn’t have complete rights over the property, but only retains a lien. You will require lenders consent after paying off the mortgage to transfer the property on your name.
- In order to complete your real estate purchase, you must carefully select the first mortgage to complete your finances for making the purchase. It is advisable to take professional help who can help you decide about your first mortgage as they are specialized to assist clients who want to take financial help for making an investment in real estates.
Sometimes, borrowers may apply for second mortgage while his first mortgage is still not completely paid.
Hence, the lender always makes sure that you are potential enough to pay for both the mortgages.
Understanding first mortgage loan and second mortgage loan
Suppose you buy a house in some amount and you have paid half of the amount while you plan first mortgage for the remaining amount.
After seven years, you need that amount from second mortgage. Unfortunately, the situations don’t allow you pay back both the mortgages hence the lender is forced to sell your property to complete the mortgages.
But the amount received from selling your property is less which is not sufficient to fulfill both first mortgage and the second mortgage.
It is suggested to contact with the private lenders or bank in this regard and they can assist you to avail the loans at minimum rate of interest.
But mortgage loans are the secured loans and you can avail such loans at minimum interest rate.
Additionally, you can avail long term mortgage loans in this regard.
This gives a complete understanding of first mortgage loan. Hence, it is important to take a financial advised to assess the value of the mortgage and to analyse the risk.
You can seek financial adviser’s help who are expert in this field to help you choose the first mortgage loan.
Category: Loans
