The latest video in our Zing Education Series is on a topic that affects many of our clients who are going through the refinance process: subordination.

Quicken Loans Home Loan Expert Kelly Jasper explains how subordination works. In a nutshell, when a client has a second mortgage in the form of a home equity loan or line of credit, the owner of the second mortgage will automatically move to first lien when the original first mortgage is paid off. At that point, the second mortgage must be paid off before another mortgage can be issued on the home. To avoid this, the second mortgage company agrees to subordinate back to second lien, allowing the first mortgage to refinance and the second mortgage to remain unchanged.

According to Jasper, the process takes about 14–20 days. Anyone who has a second mortgage and wants to refinance to a lower rate or pay off their home sooner should keep in mind the extra time it may take for a subordination to be approved.

Please watch the video, and let us know if you have any questions about subordination – or anything. We’re here with answers. Enjoy!

 

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This Post Has 2 Comments

  1. I’m trying to purchase a new home. I have IRS debt and was told I must obtain a subordination agreement with the IRS before I can obtain the preapproved loan.
    How can I subordinate a NEW loan? I see examples of subordination agreements used when refinancing but there are NO example subordinating a new loan. How does it work and can I be turned down?

    1. I see that you are working with us and I absolutely want to make sure you get the correct information. I’m going to send this over to our Client Relations team so we can have someone reach out.

      Thanks,
      Kevin Graham

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