You've got junior prom and senior prom. You've got junior senators and senior senators. You've got Robert Downey Jr. and Robert Downey Sr.
And you've got junior and senior mortgages. Junior mortgages are considered subordinate debt, as compared to the senior variety. In the case of default, the junior mortgage will only get paid back after the senior mortgage gets repaid first.
The distinctions basically designate where in line a creditor stands when a bankruptcy happens. Senior mortgage...front of the line. Junior mortgage...somewhere behind senior mortgage.
You buy a house with a mortgage. After a while, you take on a second mortgage to pay for the ashram you want to build in the backyard. That second mortgage is the junior mortgage.
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Finance: What is a second mortgage?4 Views
Finance allah shmoop What is a second mortgage Okay you
know what a first mortgages it's otherwise cleverly named what
is called it is called oh yeah Mortgage it's Just
a loan on a house You paid four hundred grand
for this baby Hundred grand down two hundred fifty grand
in a first mortgage And they're still fifty grand You
owe well where's that fifty large coming from the bank
wouldn't loan you any more on a first mortgage that
was costing you six percent a year Tio you know
to rent that money So you had to get a
second mortgage which should things go awry and you become
a statistic Well that's it's fully behind the first mortgage
in the priority stack of payback So in a bankruptcy
situation the first mortgage first what's called a first mortgage
get it fully paid along with any fees associated with
it and back interest accrued and any other things that
are associated with that first mortgage it stands in line
first in priority Then any cash leftover gets attributed to
that second mortgage So not surprisingly second mortgage money costs
a lot more to rent then first mortgage money because
the risk of non payment in a bad situation is
meaningful E higher especially when the borrowed does this for 00:01:25.136 --> [endTime] a living
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