Refinance a First Mortgage with a Second

If you have a first and second mortgage can you refi the first independant of the second?

2 Answers

Yes you can, however, it is up to the 2nd mortgage company if they wish to subordinate the 2nd or not. Subordinating means agreeing to be in 2nd position. Most mortgage companies do not have a problem with this, but some do. If there is a greater risk on the first with the LTV or the borrowers credit, they may choose to not allow you to subordinate.

All you need to do is call your 2nd mortgage lender and ask them for a subordination request form and see how much they charge as a fee. Most charge around $250 to subordinate. Then pass this information on to your new lender. They normally take care of the paperwork and footwork. They may ask you to pay the fee, or they might pay the fee and just add it to your closing costs.

I have seen when appraisals come back with a low value, the 2nd mortgage company will not allow the subordination because of the higher CLTV and it being too much of a risk for them to subordinate.

I work with TCF National Bank, and they allow a CLTV (combined loan to value) of up to 89.99%, whereas most lenders will not allow more then 80% CLTV.

Good luck!

Most lenders will allow a subordination with loan to values easily 95% or higher for a HARP loan, especially when the new guidelines kick in come March. Haven't heard of any limiting CLTV's to 90%!