Second Third Liens

The attractive element about 125% LTV second mortgages is that they can sometimes be placed third lien—or third in line behind two other mortgages.

Most lenders prefer to be second lien. However, many lenders with this program are willing to place themselves in third lien behind first and second mortgages.

A lien is any legal claim or attachment, filed on record, against a property. The lien is usually a security for the payment of an obligation, such as real estate taxes, contractors' services and mortgage loans.

It may help to think of liens as a line of people who want a piece of your property. If the property is ever sold, the proceeds must first completely pay off the first lien. Whatever remains is then used to completely pay the next lien; this process continues until all liens have been paid.

If there is any money remaining after all of this, the seller/owner receives the net surplus.

Real estate taxes automatically take a priority lien position ahead of all other claims. This is simply the federal government exercising its prerogative and cutting in front of all other liens.

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