A subordination is the solution to the following problem: Let’s say you have a first and second mortgage. You want to refinance your first mortgage, but you don’t want to pay off your second mortgage. Or maybe your second mortgage is a home equity line of credit and you want to pay it off, but you don’t want to close it.

When you pay off your old first mortgage with a new loan, your second mortgage will automatically slide into first lien position becoming, in effect, a first mortgage. But to refinance, you new mortgage wants be in first lien position, so this is a problem. And the solution is a subordination.

We will send a subordination request with the terms of your new loan, a copy of your appraisal and a check from you (expect to pay $100-300) to your second mortgage lender. If the request is approved, your second mortgage lender will send back a subordination agreement, formally consenting to remain in second lien position behind your new first mortgage.

So long as your new first mortgage is just big enough to pay off your old loan and cover closing costs, approval is almost guaranteed. But if you are taking cash back (even to pay off other debts), your request may be denied.

Processing a subordination adds to the time it takes to close your refinance. We’ll do our best to find out the current turn times for your second mortgage lender and allow adequate time when we lock your interest rate.