Mortgages on a property are referred to by a number. For example, you might have a first mortgage on your home. Some have a second mortgage and some even have a third.
This numbering system is simply the order in which they were registered. It is also the order in which they are satisfied in the event they go into default.
Here is an example. The property owner has a first and second mortgage. They stop paying the mortgages. If the property is sold under power of sale, the first mortgage is paid out before the second sees anything.
Considering this same scenario, the second mortgagee can stop the property from going power of sale. They have to continue paying the first mortgage so that the mortgagee does not force the sale.
Why do some real estate owners have a second or third mortgage on their property? They might need some money for investment purposes or something that comes along in life. Some owners might refinance the first mortgage to obtain the funds they need.
With any real estate transaction, HomesByOwner of Durham Region recommends that all buyers and sellers consult with a real estate lawyer prior to entering into an agreement.
Check out our Durham Region Homes For Sale website.
HomesByOwner of Durham Region
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