What is a 'second mortgage' and how does it relate to first mortgage priority in Delaware?
Why A second mortgage is subordinate to the first mortgage — in foreclosure, the first mortgage is paid before the second mortgage Is Correct
Answer B: A second mortgage is subordinate to the first mortgage — in foreclosure, the first mortgage is paid before the second mortgage
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.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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