Mortgage Definition: Subordination

Today’s Mortgage Definition is: Subordination

Subordination — A Simple Definition:

In the mortgage arena, most of the time when someone refers to a subordination, they are referring to a process involving second mortgage on a property. If you are interested in refinancing your home and you have a second mortgage, you will need to get a subordination agreed to by the lender who holds the second mortgage. In plain English: getting a subordination completed by the lender who holds the second mortgage means that the lender agrees to have their loan remain in second position while the loan in first position is refinanced.

Subordination — An Expanded Definition:

In most cases, your loan officer or a member of the loan officer’s team will do virtually everything required to get a subordination completed. The general steps to getting a subordination completed include:

  • Contact the lender who holds the second mortgage and get a copy of the subordination requirements.
  • Complete a subordination application with the information required – typically it is information about the current first mortgage, the new first mortgage and appraised value.
  • Follow up with the lender who holds the second mortgage until the subordination is approved.

Now that rates are low, many people are going through the refinance process and subordination(s) are a common occurrence. While it can be tricky to get a subordination approved, if you have a second mortgage it is important you remember that you will want to discuss the subordination requirements with your loan officer before either of you spend a great deal of time and effort into refinancing your first mortgage.


Because if your second mortgage lender won’t subordinate your loan, there is virtually no chance that you can refinance your first mortgage.

Be sure to ask your loan officer about subordination of your second mortgage if want to refinance.