What Are First And Second Mortgages?

Home Loans

What Are First And Second Mortgages?
(presented by www.refinance-refinance.net - mortgage lenders)

By Ben Afzal

Many lenders will make loans up to 100% of the value of a property.

Lenders see larger loans on a property as more risky. If they lend you only 50% of the money to buy a property the loan is low on risk to the lender. If you stop making payments the lender can seize the property, sell it, and have more than enough money left over to recover their loan amount.

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When they loan you much more of the value of a property their risk increases.

Lenders often charge private mortgage insurance for loans that are over 80% of the value of a property. This can be an expensive additional charge each month on top of your mortgage itself.

To get around the 80% cap lenders break up the loan into two pieces

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