What is a first mortgage?
It is important to note that the first mortgage is not necessarily the borrower's first loan on their first house. It is the initial mortgage that was taken out on any given house. Even though obtaining a first mortgage does not automatically imply that you have never owned a house, it is typical that the majority of first mortgages are purchased by first-time home buyers.
When you obtain a first mortgage to purchase a house, the mortgage lender who provided the funding encumbers the property with a primary lien. In the event of a loan default, this lien grants the lender the first right of refusal or claim to the property. The first mortgage lender is superior to any other lenders who have a lien on your house.
How does it work?
A first mortgage is typically used to finance the cost of buying a property. You may be required to pay a portion of this cost up front depending on the type of first mortgage you obtain. You will then be responsible for making regular payments until the loan is repaid, this will include some of the money you borrowed plus interest, property taxes and insurance.
Knowing the mortgage application process and understanding what is required of you in terms of funds and documentation are essential when purchasing your dream home. Remember, that a first mortgage simply refers to the initial loan made on a property and does not only apply to first-time homebuyers.
To fully comprehend how your first mortgage could benefit you, it is crucial to speak with an experienced mortgage professional in your area. Choosing the right first mortgage is crucial because it will serve as the main source of funding for your real estate purchase.