Junior mortgage

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Junior mortgage

A mortgage that will be satisfied only after more senior mortgages have been satisfied. E.g., a first mortgage will be satisfied prior to a second or a third mortgage.

Junior Mortgage

A mortgage secured by a lien on a property that is subordinate to another mortgage on the same property. One may take out a junior mortgage to pay for home repairs or for any number of other reasons. A junior mortgage carries a higher interest rate than a primary mortgage because the lien is less secure. A second mortgage is a junior mortgage, as are third and fourth mortgages. See also: Piggyback mortgage.
References in periodicals archive ?
Also, it should be noted that the value of the assumed loan reaches the $14,383 amount calculated ignoring the junior mortgage only when the junior mortgage effect is reduced to zero (A/P ratio = 80% of price, loan-to-value ratio = 0.
However, measures of assumable financing value that have ignored the need for a junior mortgage to bridge the gap between the assumable loan amount and the buyer's equity overestimate the value of assumable financing.
Nearly all the mathematical models of the value of assuming a favorable mortgage promulgated to date fail to deal effectively with the need, especially in the residential market, for a second junior mortgage to bridge the gap between the assumed loan and the buyer's equity.
The sale price was $115,000 paid by assumption of an existing 7% loan, a junior mortgage bridging the gap between the balance owed on the assumed loan and an 80% loan-to-value ratio, and cash equal to 20% of the purchase price.

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