What is a First Mortgage?

N. Madison

A home or property can have more than one loan or lien. Mortgage loans are registered with the appropriate county or city registry, and the loan that is registered first is considered the first mortgage. A mortgage that is registered second is considered a second mortgage. It is also possible to have a third or fourth mortgage on a home or property. However, these situations are less frequent than first and second mortgages.

Borrowers may take out additional mortgages on a home or property.
Borrowers may take out additional mortgages on a home or property.

Often, a person will secure a first mortgage and then go on to obtain a second mortgage in the form of a home equity loan. The terms of second mortgages may vary, as can those of first mortgages. Often, the loan repayment period is up to 30 years. On some second mortgages, however, the repayment schedule is much shorter than with first mortgages, and some require payment just one year after funding.

Often, the loan repayment period on a first mortgage is up to 30 years.
Often, the loan repayment period on a first mortgage is up to 30 years.

A mortgage is a loan a person applies for in order to get funds for buying a home or another type of real estate. Many people are unaware that there are different types of mortgages. As such, the term first mortgage may sound very official to someone who is just starting the whole home-hunting process. With some time, they learn that first mortgage simply means the primary mortgage on a home or property.

To obtain a first mortgage, a borrower must fill out a mortgage application. This means providing information like the borrower's identity, employment details, income, and expenses. The borrower will also have to provide documentation of these things and allow the mortgage lender to check his credit. As part of the mortgage-application process, the potential borrower also provides information regarding the home or property he wants to buy and how much money he wants to borrow.

It helps to consider default situations, such as foreclosures, in understanding the difference between a first and second mortgage. If a buyer defaults on her mortgage and her home is offered for sale at an auction, the proceeds will go to satisfy the first mortgage loan before the second loan is even considered. If the proceeds are not enough to satisfy both, this may leave the second mortgage lender out in the cold and losing some or all of its money.

Some banks and lending companies are more wary when it comes to applications for second mortgages than they are with first mortgages. This is because they have more to lose in a default situation. For example, they may be stricter about the types of credit they will accept. They may also charge higher interest rates. However, a second mortgage loan does have the borrower's equity in the property to back it up, which may make it more attractive to some lenders.

First mortgages are the first lien registered on a property.
First mortgages are the first lien registered on a property.

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Discussion Comments


@Logicfest -- The primary mortgage holder isn't always the first in line when it comes to getting paid if something goes wrong with a mortgage. For example, a tax lien can attach and the government will get its money with that before anyone else sees a dime.


This article does a great job at pointing out why it is great to hold a first mortgage in case a buyer runs into financial trouble. In the case of a default or foreclosure, the bank with the first mortgage will typically get paid first and those that come after will have to fight over what (if anything) is left.

That is why someone wanting to take out a second mortgage will have a lot more luck if they have equity in the home. Equity is what value the borrower holds after the mortgage is considered. If a buyer owns $100,000 on a mortgage and the home is worth $150,000, then the borrower has $50,000 in equity and can secure a secondary mortgage with that.

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