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Can you refinance a 1st while having a second? What are the rules and stipulations.

  • October 21 2010 - Spring Valley
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Answers (8)

Rolf,

What is your reason for wanting to retain the 2nd, instead  of refinancing it, or have both combined into one loan?

We do not perform subordinations on 2nds for the reason that Deborah mentioned why she will not lock. It's not a simple matter of who will subordinate, as much as it is when. 

While in limbo, rates and guidelines may change. To protect yourself you could lock for a longer period of time, at an additional cost. This is a time consuming process for everyone involved, that may turn out more costly in the end.

Happy funding, Rudi
  • October 23 2010
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Subordinations are not a mystery.  The best way for you to learn about the subordination of your loan would be for you to call your lender!    They should be able to quickly tell you their requirements, and the time needed to process the request. 

Most likely your 2nd Mtg lender will want a copy of the appraisal (to ensure you have sufficient equity so their loan is adequately collateralized) and to fully understand the new loan for which you are applying (it's understandable if your subordinating lender would prefer/require no cash-out with the new loan). 
  • October 22 2010
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Let me second Robert's comment:  Only stronger!  I will not lock the interest rate on the new mortgage until the subordination agreement is signed, sealed and delivered.  I have had lenders tell me it would take a few days when, in fact, it took a few weeks.  It is imperative to understand that your loan officer is in zip control of what the lender on the second is going to do.  I can forward all documentation tied in a pretty bow and they can choose to process it timely....or not.
  • October 22 2010
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@ Robert...

Welcome to Zillow's forums. Please be aware that including any contact info in your post (e.g. website, email, phone, etc) is not allowed.

As for issues with re-subordinating a second, my personal experience is that my LO has enough market awareness to know which lenders are causing delays in resubordinations and which are not - and is therefore able to give decent advice on how to proceed (which is what I pay him for, no?).
  • October 22 2010
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Rolf78,

One other important thing to consider as the consumer is that if you are eligible to subordinate your existing second mortgage, realize that it can take a lot of time to complete.  Thus, it would be my recommendation to NOT lock your interest rate until you have a completed subordination back from the second mortgage holder.  Many borrowers are not comfortable "floating" their rate this long into the process and with paying for the appraisal and subordination before knowing they have a rate locked in on the new first. 

Ask yourself if this arrangement is OK.  If it is, you will avoid the problems and costs associated with an inherently longer loan process.  If it is not, you must either pay for a longer rate lock up front, or run the risk of extending your lock later on.

Any questions, just let me know.

Rob Spinosa
RPM Mortgage
[Contact info deleted by moderator]

  • October 22 2010
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Freddie Mac Loan Lookup

Fannie Mae Loan Lookup

What this comes done to in most cases is Value.  If you have enough value and can maintin the CLTV or Total Loan to Value in line with new requirements then you should be able to suboridnate.  If your loan is Fannie Mae or Freddie Mac, you can go over 100% of the value.  Check with a Professional to help.  Deborah is right advise is free, and you can even lookup your loan at Freddie and Fannie.  Here are the links to see if you have one of those mortgages owned by one of the government enterprises. 

  • October 22 2010
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Good call Deborah.
  • October 22 2010
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The answer is "maybe".  If you want to leave the second in place and only refinance the first, it is called a subordination.  The new lender has to agree to the subordination of the second (allowing it to remain in place) and the holder of the second has to also agree.  A suboridination agreement is required and the lender will usually charge anywhere from $250 to $500 for the paperwork.  The total loan to value will come into play, particularly if you are trying to do a new conventional fixed loan.  If, on the other hand, you want to roll the second into the new first your new loan will be considered a cash out loan and subject to lower loan to value limits.  Talking with a mortgage professional is your best bet...no one will charge you for advice.
  • October 21 2010
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