What is a first mortgage?

A first mortgage is defined as a mortgage that is in first lien position, meaning it takes priority over all other liens against the property. This positioning is crucial because it affects the order in which debts are repaid in the event of a foreclosure. If the borrower defaults on their loan, the first mortgage lender has the right to be repaid before any other lenders or lienholders. This priority typically translates into lower interest rates and better terms for borrowers, as lenders perceive first mortgages to be less risky compared to subordinate or second mortgages.

Understanding the implications of lien positions is essential in real estate finance, as it directly influences the financing structure of a property. While other options may describe various aspects of mortgages, they do not capture the fundamental characteristic of a first mortgage in terms of its priority status within the hierarchy of liens.