Subordination Agreement For Heloc
Description
How to fill out Alabama Lease Subordination Agreement?
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FAQ
What is a subordination agreement? It's a contract between your first mortgage lender and your home equity lender. It allows your home equity lender to agree to remain in the second lien position on a property behind a new first lien mortgage.
A subordination agreement prioritizes collateralized debts, ranking one behind another for purposes of collecting repayment from a debtor in the event of foreclosure or bankruptcy. A second-in-line creditor collects only when and if the priority creditor has been fully paid.
Naturally there is a subordination processing fee which typically costs around $250, less than the standard appraisal report but an added cost to be aware of. A HELOC or home equity line of credit falls into the home equity loan category of second mortgage loans.
A HELOC subordination involves a formal request of the HELOC lender, usually with the help of your mortgage broker, to "stay in a junior lien position" while the primary mortgage - the one in a superior position - is refinanced.
Nothing requires the heloc lender to agree to subordinate its position; it is solely the lender's choice. if the heloc lender is unwilling to subordinate, the only way to refinance would be to close out the heloc.
