A quick quiz on second mortgages. The answer: they carry higher interest rates because lenders take on more risk when they're second in line during foreclosure.
Get ready for question of the day. Which of the following is true about a second mortgage? A. It is typically issued at a higher rate of interest. B. It cannot be used as a security instrument. C. It has priority over a first mortgage. D. It is not negotiable. The answer is letter A. Second mortgages carry higher risk for lenders because they're second in line after the first mortgage holder. In case of foreclosure, that means the first mortgage holder is paid in full before any remaining monies are distributed. This added exposure typically results in higher interest rates. Learned something new? Give us a like, tag a friend, and let's keep the conversation going. Message us here or visit our website.
