What is the difference between a primary and secondary mortgage?

A primary mortgage is the first loan taken against a property. It is the loan used to purchase the property and is generally the largest loan against the property. A secondary mortgage is sometimes called a home equity loan or home equity line of credit (HELOC). This loan is taken out against the current value of the property that has already been purchased, and is usually smaller than the primary mortgage. This loan may be used to finance repairs or additions to the property, or it may be used to purchase other assets such as cars or investments. In California, all mortgages must comply with certain laws which vary by county. Generally speaking, a primary mortgage must meet some basic requirements such as loan size, interest rate, and associated fees and must be disclosed to the borrower. Homeowners must make sure they understand the terms and conditions associated with the mortgage before signing it. Secondary mortgages usually have different terms and conditions than primary mortgages and the homeowner should review these terms thoroughly. Generally speaking, secondary mortgages have higher interest rates and are for shorter terms. It is important for homeowners to make sure they understand the risks associated with taking out a second loan on a property as it may put them at risk of foreclosure if they cannot make the payments.

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What is the difference between a primary and secondary mortgage?

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