Finance
In Oklahoma, a second mortgage is subordinate to the first mortgage meaning:
AThe second mortgage has priority in foreclosure
BThe first mortgage is paid first from foreclosure proceeds; the second mortgage lender has a junior claim✓ Correct
CBoth mortgages are paid equally in foreclosure
DThe second mortgage automatically becomes a first mortgage if the first is paid off
Explanation
A second mortgage is subordinate (junior) to the first mortgage. In a foreclosure, the first mortgage holder is paid first from the proceeds.
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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.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
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