With low interest rates, many homeowners like you choose to refinance their first mortgages. Typically, the bank that refinances your first mortgage repays and closes your home equity loan account. However, you may have the right to refinance and keep your wells fargo net worth account open – so you can maintain the interest rate, terms and access to funds on your current HOME EQUITY LINE OF CREDIT – through a process called “rebalancing.” Wells Fargo may agree to move your home account to the second lien position on your property after your new first mortgage. Not surprisingly, mortgage lenders don`t like the risk associated with a second lien. A subordination agreement allows them to redirect your mortgage to the first lien and your home equity line of credit to the second lien position. Let`s go over the basics of subordination, using a home equity line of credit (HOME EQUITY LINE OF CREDIT) as the main example. Keep in mind that these concepts still apply if you have a home equity loan. Despite its technical-sounding name, the subordination agreement has a simple purpose. It assigns your new mortgage to the first lien position, so it`s possible to refinance yourself with a home equity loan or line of credit. Signing your agreement is a positive step on your way to refinancing. Subordination is the process of classifying home loans (mortgage, home equity line of credit, or home equity loan) by importance. For example, if you have a home ownership line of credit, you actually have two loans – your mortgage and your home equity line of credit. Both are guaranteed by warranty in your home at the same time.
By subordination, lenders assign a “pawn position” to these loans. Typically, your mortgage is given the first lien position, while your HOME EQUITY line of credit becomes the second lien. If you have any questions about the submission, we are here to help. Make an appointment with us today. Most subordination agreements are transparent. In fact, you may not realize what`s going on until you`re asked for a signature. Other times, delays or fees may surprise you. Here are some important notes about the subordination process. Call a wells Fargo Residential Equity Specialist today at 1-800-216-2408 to discuss your options.
If you`re talking to a mortgage lender about refinancing, find out about subordination as an option to keep your current home account open. Each new home value account requires an application process, which typically includes credit checks and multiple forms. Lenders may also charge fees, and states and places may charge admission fees or taxes. On the other hand, the subordination process does not require a new application and often does not require a credit check other than that provided by your first mortgage refinancing provider. There can only be a minimal processing fee. Whether your first mortgage is with Wells Fargo or another lender, we work with that institution on your behalf to make the process as easy as possible. Often, all the information you need is available from your mortgage lender and the securities company. The process usually takes about 25 business days.
Yes, even if the balance is $0, whether it was paid or consolidated during the refinancing process, you may be able to keep your residential account open for future use. The first privilege is always paid first. (In this case, it`s your mortgage.) Equity can only be allocated to repay the second lien once your mortgage is fully paid. If there was a third privilege, it would be refunded after the second privilege. And so on. . If foreclosed, your mortgage and home equity line of credit must be paid off with the equity in your home. Unfortunately, the equity in a home can`t always cover the full cost of both loans. Subordination solves this problem with predetermined privilege positions. Usually, a second mortgage – a smaller loan or line of credit that is borrowed on the equity in your home to help you make home renovations or use a down payment on a home. This is a contract between your first mortgage lender and your home equity lender. It allows your home equity lender to agree to stay behind a new first mortgage in the second pawn position on a property.
A first mortgage is usually the main loan you originally used to buy or refinance your home or other property – it`s often a much higher amount than a home loan or line of credit. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Refinancing is the process of paying off your old mortgage and replacing it with a better one. When your mortgage is paid in full, the second lien (HOME EQUITY LINE OF CREDIT) automatically increases the priority. Your home equity line of credit becomes the first privilege and your new mortgage becomes the second privilege. A legal claim or seizure against property as security for payment of an obligation. By keeping your current home account, you may be able to maintain the current interest rate and conditions, which may be more favorable than closing it and applying for a new account. Plus, you`ll keep your current account number and avoid the hassle and fees associated with applying for a new account. Mortgage Customer Service 1-800-357-6675 Monday to Friday: 6 a.m. to 10 p.m. Sat: 8 a.m.
to 2 p.m. If there is not enough equity to cover what is due to your second lien, the HOME EQUITY lender will lose money. Subordination can`t magically repay loans, but it helps lenders assess risk and set appropriate interest rates. .