In case of enforcement, your mortgage and HELOC must be repaid with your home`s own funds. Unfortunately, a home`s equity can`t always cover the full cost of both loans. Subordination solves this problem with predetermined set positions. Let`s look at the basics of subordination, using a home line of credit (HELOC) as the main example. Remember that these concepts are still valid if you have a home loan. Most subordination agreements are flawless. In fact, you may not realize what`s going on until you`re asked for a signature. Other periods, delays or fees may surprise you. Here are some important indications about the process of subordination. The first deposit is always paid first. (In this case, it`s your mortgage.) Equity can only be allocated if your mortgage is paid in full. Refinancing is the process in which you pay off your old mortgage and replace it with a better one. If your mortgage is paid in full, the second right of pledge (HELOC) automatically increases in priority.

Your HELOC becomes the first pledge and your new mortgage the second. If you have any questions about subordination, we are here to help. See you with us today. Not surprisingly, mortgage lenders don`t like the risk of a second right of pledge. . . .