What is a first mortgage?

A first mortgage is a type of loan used to buy real estate such as a house or commercial property. In North Carolina, a first mortgage is secured by the house or property itself and is called a deed of trust. This means that if the borrower fails to make payments or defaults on the loan, the lender can take legal action to seize the property as repayment. The first mortgage is the most senior loan in the event of a default. In other words, the lender will be the first to receive payment out of any funds available from a foreclosure. In North Carolina, lenders can also require that any additional mortgages on the property must be subordinate to the first mortgage, meaning that the lenders of those loans can only claim whatever money is left after the first mortgage is paid off. Because the lender has first claim to the home or property, first mortgages generally have more attractive interest rates and terms than subsequent mortgages. This is in part because the lender is taking on less risk. However, first mortgages may also require a larger down payment. As with all legal matters, it is important to consult an attorney who is knowledgeable about mortgage laws in North Carolina before taking out a first mortgage.

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What is a first mortgage?

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