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1st Mortgage - First Mortgage


When you are ready to purchase a home for the first time, you will be looking for a 1st mortgage.  It can be helpful to understand what exactly this means and how it fits into the home purchasing process.


When you want to buy a home, it is not very likely that you will have the whole amount in cash to pay for it; you will require a loan, or a mortgage.  The loan that you take out on a home is considered a 1st mortgage, and that lender is considered the first lien holder.  This protects the rights of the lender in the case where a person can no longer make payments on the home and the first lien holder or the holder of the 1st mortgage will receive any money from a lawsuit or bankruptcy before other creditors.  If the home is forced into foreclosure, the 1st mortgage holder will own the home and could sell it on the open market. 


A 1st mortgage will typically have a relatively low interest rate.  One reason for this is that the risk margin is lower than it would be for a 2nd mortgage lien holder.  If you ever decide to look for mortgage refinancing, you will usually get a better rate if you do a mortgage refinance on the 1st mortgage with the original lender.   


Some people get a 2nd mortgage through a different lender.  When this occurs, it is important to remember to pay off the first lien holder first.  The reason for this is that although all of your bills should be paid, if you don't make a payment to the 2nd lien holder, the home won't be in default as long as you are paying the first lien holder.  If you are having money troubles because of a lost job or major medical bills or other reasons, you should always try to pay the first lien holder so that you can stay in your house. 


If you don't have the best credit, you can still get a bad credit mortgage as a 1st mortgage if you shop around for lenders who offer that type of a loan.  It is a good idea to try to improve your credit as much as possible before loan shopping. 


Whether you have one mortgage or more, it is essential that the 1st mortgage takes the top priority when making payments.  Before you get the loan for your house, you should shop around for the lowest interest rates and terms so that you can get the best deal around.