First Mortgage

A mortgage in a first lien position on the property that secures the mortgage. A first mortgage has priority over all other liens or claims on a property in the event of default.

If the loan to value (LTV) ratio of a first mortgage is greater than 80%, lenders generally require private mortgage insurance (PMI). In such a case, it can sometimes be economical for a borrower to limit the size of the first mortgage to an 80% LTV and use secondary financing to borrow the remaining amount needed.

The economics of paying PMI versus using a second loan largely depends on the rate at which a borrower expects the value of his or her home to increase. PMI can be eliminated when the LTV of the first mortgage reaches 78%; however, a second lien, which typically carries a higher interest rate than a first mortgage, must be paid-off, most likely through a refinancing of the first mortgage for an amount equal to the remaining balance of the both the first and second mortgages.


Investment dictionary. . 2012.

Look at other dictionaries:

  • first mortgage — see mortgage Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • first mortgage — first mortgage, adj. a mortgage having priority over other mortgages on property. [1850 55] * * * …   Universalium

  • first mortgage — n. a mortgage having priority over all other liens or encumbrances on the same property, except those, as real estate taxes, given priority by statute …   English World dictionary

  • first mortgage — A type of mortgage that through a lien gives precedence to the lender of the first mortgage over all other lenders in case of default. Bloomberg Financial Dictionary * * * first mortgage first mortgage ➔ mortgage1 * * * first mort …   Financial and business terms

  • first mortgage — noun a mortgage that has priority over all mortgages and liens except those imposed by law • Hypernyms: ↑mortgage * * * noun : a mortgage that has priority as a lien over all mortgages and liens except those imposed by paramount authority of law… …   Useful english dictionary

  • first mortgage — mortgage taken out for the first time …   English contemporary dictionary

  • first mortgage — A mortgage having priority as a lien over the lien of any other mortgage of the same property. A mortgage having priority over any other lien on the same property …   Ballentine's law dictionary

  • first mortgage — noun Date: 1728 a mortgage that has priority as a lien over all mortgages and liens except those imposed by law …   New Collegiate Dictionary

  • first mortgage — /fɜst ˈmɔgɪdʒ/ (say ferst mawgij) noun a mortgage having priority over all other mortgages on property …   Australian English dictionary

  • first mortgage debenture — A debenture with the first charge over property owned by a company. Such debentures are most commonly issued by property companies …   Accounting dictionary

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