Preferred Debt

Preferred debt is debt that the repayment of or lien position takes precedence over other debts.   Your first mortgage would be a preferred debt over your second mortgage. The main types of preferred debt include interest on mortgages, equity loans and equity lines of credit.

The interest from these types of loans is tax deductible. Not included in preferred debt are auto loans, credit cards, signature loans, personal loans, and student loans.

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