What Are First and Second Home Mortgages?

by David Jenyns on March 5, 2008

A first home mortgage is a first lien on the property. If the owner cannot pay, the investor can cause foreclosure proceedings, which will result in the sale of the property, which sale would pay him off.

A forced sale of property is to a real estate agent’s normal sale what a Police Department sale of confiscated cars is to a used car dealer’s operation. Now if the first home mortgage is for $18,000 and there should be a second mortgage for $2,000 on the house that sold for $20,000 and the results of the foreclosure sale were as set forth above, the first home mortgage holder would lose $1,000, but the second mortgage holder would be entirely wiped out.

The real estate firm receives the $17,000 first home mortgage money plus the down payment of $1,000 plus the second mortgage for $2,000 $20,000.

If the property purchaser continues to pay, all is well.

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