It is quite possible, and frequent, that a parcel of real estate has more than one current mortgage in place.Consider this example.Suppose I bought a house 5 years ago for my personal dwelling.I paid $100,000 in cash and borrowed the rest of the purchase price from a local lender using a mortgage loan.Today, the remaining principal (outstanding balance) on that mortgage loan is $200,000.I want to renovate the house at a cost of $50,000, but I don't have any cash.I go to another lender (for no particular reason) and ask for another loan for $50,000 for the renovations.The lender says "yes" to my request and we enter into another mortgage loan arrangement.

At this point, I now have two mortgage loans in place:one with the first lender that was executed 5 years ago and has a balance of $200,000 and another loan with the second lender that was executed today with a balance of $50,000.Both lenders have a security interest (a type of lien) in my house, but in the event that I default on the terms of either or both of the mortgage loans, the first lender has first, or senior, priority in the event of foreclosure.The second lender has second, or junior, priority in the event of foreclosure.As long as I live up to the promises in both promissory notes, all is well from the lenders' perspectives.(Quick Thinking Question:If all other things are equal, would you expect the interest rate to be higher on a first mortgage or a second mortgage?)

Why is the concept of lien priority of senior and junior liens important?Well, let's suppose I stop making payments on both loans.The first lender will bring a foreclosure lawsuit. If the first lender wins the case and the court sells my house at public auction for $220,000, the first $200,000 of proceeds from the sale will be applied to the senior loan and the remaining $20,000 will go to the junior loan.I still owe the second lender $30,000, but that lender no longer has a security interest in the property and can only try to get money from me if I have other assets to pursue.(Quick Thinking Question:What is your estimate of the market value of my house at the time of the auction based on the information given in the example?How did you arrive at your estimate?)

The purpose of this simple example is to demonstrate that there may be multiple mortgages (and other liens) on the same parcel of real estate, but the priority of each mortgage depends on its seniority.Property tax liens are an exception to the general rule that "first in time is first in line" because they take priority over all other liens.

Based on the discussion of lien priority, what does the idiom "first in time is first in line" mean if there are multiple mortgages in place on a parcel of real estate?(Real Estate Finance, provide brief description using the information above).