A Colorado 'second mortgage' or 'junior lien' is typically characterized by:
Why B. A higher interest rate than the first mortgage, as the lender takes a subordinate lien position with more risk Is Correct
Answer B: B. A higher interest rate than the first mortgage, as the lender takes a subordinate lien position with more risk
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
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Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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