Finance
In Kansas, a 'subordinate mortgage' (second mortgage) means the second mortgage lender:
AHas first priority on the property in case of foreclosure
BHas a lower priority than the first mortgage — in foreclosure, the first mortgage is paid first, with second mortgage proceeds only if funds remain✓ Correct
CIs paid equally with the first mortgage in foreclosure
DAlways has priority over property taxes
Explanation
A subordinate (second) mortgage has a lower priority than the first mortgage. In foreclosure, the first mortgage must be paid in full before any proceeds flow to the second mortgage holder.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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