Profile picture for wpeirce

Can I refinance a 1st mortgage leaving an existing equity loan in place?

I have a 1st at $392,000 and an equity loan at $83,000.  Home is currently zestimated at $470,000.  Can I refinance the 1st without touching the equity loan?
  • May 19 2009 - Southwest
  • 0Yes

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Answers (1)

Profile picture for SoCal Engr
In theory, yes. In practice, maybe.

The issue is going to be LTV/CLTV, and you look tight. Assuming a value of $470K (which is probably not safe to assume off of a Zestimate), the $392K balance works out to 83% LTV. With the $83K equity loan, your CLTV is 101%.

Ignoring the 83% LTV and the "iffy" valuation based on Zestimate, the sticking point may be that the holder of the equity loan may refuse to resubordinate.

When I refi'd, Citi would only resubordinate on a CLTV of 65%. Their normal target was 90%, but the 65% was based on their assessment that my home was in a "declining market". We were fortunate, as our CLTV was only 64% - but it could easily have been a different story. Lenders in second position seem to have become very averse to resubordinating without a significant safety margin.

Your best bet is to post a loan request, see who responds, and then talk to a few lenders to see what they can really offer.
  • May 19 2009
  • 0Yes

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