CandleFocus

First Mortgage

Candlefocus Editor
A first mortgage is a key financial tool for many homeowners, as it is the primary lien against one's home. In other words, it provides the lender with the first claim on the house should the borrower default on payments. This primary lien makes it easier for the lender to recoup their investment if the homeowner fails to make on time payments. A first mortgage typically provides a larger loan than other options, such as second mortgages or home equity lines of credit (HELOC).

The loan-to-value (LTV) ratio of a first mortgage can impact eligibility and cost of the loan. LTV is the amount of the loan divided by the property's appraised value. If the LTV is greater than 80%, lenders typically require private mortgage insurance (PMI). This is an extra cost the borrower must pay in addition to the loan, making it more expensive.

When it comes to taxes, the mortgage interest paid on a first mortgage is deductible for taxpayers who itemize their expenses on their tax returns. This can provide a significant deduction that could reduce one's tax bill.

Overall, having a first mortgage is an important financial obligation for homeowners. Those considering one should compare various lenders and loan offers to find the best fit for their needs. By finding the best lender and loan package, one can ensure that the loan is the most advantageous option in the long run.

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