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Refinancing your mortgage can be a strategic move—especially when interest rates drop. But if you have a Home Equity Line of Credit (HELOC), refinancing your first mortgage becomes more complex. That’s where HELOC subordination comes in. This process ensures your HELOC doesn’t block you from locking in a better rate on your first mortgage.
HELOC subordination is a lender-approved process that allows your HELOC to remain in second lien position when you refinance your first mortgage. Lien position determines which lender gets paid first if the property is foreclosed. Without subordination, the HELOC could shift into first position—something your new mortgage lender won’t allow.
To refinance your first mortgage and retain your HELOC, the HELOC lender must agree to subordinate their lien—essentially, step aside and let the new mortgage take precedence.
When rates are low, refinancing a first mortgage can lead to significant savings over the life of your loan. But if you have an existing HELOC, it complicates the process. Without subordination, you’d be forced to:
Subordination avoids both of these scenarios. You get to keep your low-rate first mortgage and retain access to your HELOC.
The process varies slightly between lenders, but typically includes the following steps:
Important: Not all lenders approve subordination requests. Each has unique criteria related to credit score, loan-to-value (LTV) ratios, and current account standing.
No, your HELOC’s interest rate and credit line typically remain unchanged. Only its lien position is affected.
Yes, but the new lender will need to approve it, and it will be in second position.
Typically 2–3 weeks, but it can take longer depending on the HELOC lender’s process and documentation requirements.
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.