What type of mortgage has a lien position subordinate to the first mortgage?

A second mortgage is a type of mortgage that takes a lien position subordinate to the first mortgage. This means that in the event of a foreclosure, the first mortgage lender has priority in recovering funds from the sale of the property. The second mortgage lender only receives payment after the first mortgage has been fully satisfied.

Second mortgages are typically used by homeowners to access the equity in their homes. They can provide funds for various purposes, such as home improvements, debt consolidation, or expenses, leveraging the equity that the homeowner has built up. Since they are subordinate to the first mortgage, second mortgages usually carry higher interest rates to compensate for the increased risk taken on by the lender.

While a home equity loan could also have a subordinate lien position similar to a second mortgage, it is specifically a type of second mortgage. The term “subordinate mortgage” is not commonly used on its own in this context as it is more a descriptive term rather than one of the categories of mortgages. A conventional loan typically refers to a mortgage that is not insured or guaranteed by a government agency and, depending on its placement, could either be in a first or subordinate position. Thus, the most fitting and commonly understood term for what the question is asking about is indeed second mortgage.