Beat Mortgage

First Mortagage

July 18th, 2007

Mortgage is the term used for the residential property purchased through financial loan form some financial institution or banks. In this system the property buyer is the official owner of the unit but the first rights of the same property remains mortgaged with the financing company or the bank who has lent related finance to the borrower. The original set of all the legal documents also remain in the custody of the financer and the no objection consent is formally been obtained by the financer from the borrower for establishing their legal rights on the property concerned.

In the event of any default in repaying the borrowed amount by the property owner, the financing bank or the company takes over the physical possession of the involved property for reimbursing their dues and interest etc. Technically, a mortgage that has priority as a Lien over all the other mortgages and in the event of the foreclosure, the first mortgage has to be fulfilled before any other mortgages. It is the first to be paid when the property is sold. This system is also known as Senior Mortgage.

For instance, the property with costing $100,000 is financed through First Mortgage option of $75,000, the second mortgage of $15,000 and $10,000 in cash. Now if the borrower somehow defaults and the said property is sold upon foreclosure for $80,000, the First Mortgage holder is authorized to get amount of the unpaid principal plus legal expenses. And thus the second mortgage is entitled to get any excess after the first mortgage has been fulfilled.

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