Second mortgages can be extremely risky.

Question

Quizplus · Accepted Answer

Second mortgages are risky because they are subordinate to the first mortgage, meaning that if the borrower defaults on their payments, the lender of the first mortgage has priority to the sale proceeds of the property. As a result, the lender of the second mortgage may not be able to recover their investment in full or at all. Additionally, second mortgages often come with higher interest rates and fees, making them even riskier for borrowers.

Second Mortgages Can Be Extremely Risky