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Simple English definitions for legal terms
senior mortgage
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A quick definition of senior mortgage:
A senior mortgage is a type of loan that a person takes out to buy a property. It is called "senior" because it has priority over any other loans taken out on the same property. This means that if the borrower defaults on their payments, the senior mortgage lender has the first right to foreclose on the property and sell it to recover their money. The borrower must make regular payments on the senior mortgage until it is fully paid off, or they risk losing their property.A more thorough explanation:
A senior mortgage is a type of mortgage that has priority over another mortgage, which is known as a junior mortgage, on the same property. It means that if the property is sold or foreclosed, the senior mortgage will be paid off first before the junior mortgage.
For example, if a homeowner has two mortgages on their property, a senior mortgage of $200,000 and a junior mortgage of $50,000, and the property is sold for $250,000, the senior mortgage will be paid off in full before any money goes towards the junior mortgage.
Senior mortgages are important because they provide security to the lender that they will be paid back before any other creditors if the property is sold or foreclosed. This makes them less risky for lenders and can result in lower interest rates for borrowers.