Finance
What is 'subordinate financing' in the context of Idaho home purchases?
AA loan from a subordinate government agency
BA second mortgage or HELOC that is subordinate in lien priority to the first mortgage✓ Correct
CFinancing that is always paid off first
DA co-borrower arrangement
Explanation
Subordinate financing is any mortgage or lien that has lower priority than the first (senior) mortgage. In the event of foreclosure, the senior lienholder is paid first; subordinate lienholders receive proceeds only if funds remain after senior claims are satisfied.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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