What is the best way to describe a 2nd mortgage?

What is the best way to describe a 2nd mortgage?

• A. A conventional mortgage that is nonconforming
• B. A loan secured by personal property
• C. A government-backed loan
• D. A loan that replaces the first mortgage

Answer: (A)

A second mortgage is a loan secured by the property that sits in a lien position behind the first mortgage. That makes it a real estate loan rather than a loan secured by personal property, and it doesn’t replace the first mortgage. In many cases, second mortgages are conventional loans that don’t conform to standard agency guidelines, hence described as nonconforming. While government-backed seconds exist in some scenarios, the typical, broad way to describe a second mortgage is as a conventional loan that is nonconforming, which is why that option best fits.

A second mortgage is a loan secured by the property that sits in a lien position behind the first mortgage. That makes it a real estate loan rather than a loan secured by personal property, and it doesn’t replace the first mortgage. In many cases, second mortgages are conventional loans that don’t conform to standard agency guidelines, hence described as nonconforming. While government-backed seconds exist in some scenarios, the typical, broad way to describe a second mortgage is as a conventional loan that is nonconforming, which is why that option best fits.