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Deeds of Trust (mortgages) have a position on title based on seniority (1st, 2nd, 3rd). So if a new 1st mortgage wants to go into first position in a refinance transaction but there is already a 2nd mortgage, they must ask the 2nd mortgage to allow them to go ahead of them on title. The 2nd mortgage lender will review the proposed loan, and either approve or deny the request. This is most common when a borrower wants to retain the terms of the 2nd mortgage or they do not have enough equity to borrow a sufficient amount in the new loan to pay off the 2nd mortgage.
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Why does the second mortgage holder have to approve of the first mortgage refinance?
The second mortgage holder typically needs to approve the first mortgage refinance because they hold a subordinate position to the first mortgage. Refinancing the first mortgage could impact the second mortgage holder's position, so their consent is often required to make changes to the primary loan.
If you have a second loan on your mortgage can you refinance on just the primary loan?
Normally you can. You will have to get the Lender on the Second Mortgage to "SUBORDINATE" the loan for you. They may charge a small fee to do so. Your Title company can help you.
Why are interest rates on a 2nd mortgage higher than on a primary mortgage?
A second mortgage is generally riskier for a lender because the second mortgage is subordinate to the primary loan. This means that if the loan defaults, the first mortgage is paid off first and the lender risks losing the money put up for the second mortgage. To cover the extra risk, there is a higher interest rate placed on the second mortage.
If a bank refinances a first mortgage and there is a second mortgage on the property who does the first mortgage belong too?
The new bank in which the refinance mortgage loan has been taken from becomes the new owner of the first mortgage at the closing table. As for the second mortgage, the second mortgage holder remains the same. Before the first mortgage can close with the new lender, however, they must agree to re-subordinate the second mortgage along with their new one. It is not uncommon. I hope this information helps. Best of luck! Regards, Total Mortgage Services
What are the advantages and disadvantages of 100 percent financing however having a first mortgage and subfinancing in order to get 100 financing?
The advantage to having a first and second mortgage equalling 100% financing is that you would not have to pay PMI, which would be required on a first mortgage at 100%. The second mortgage is subordinate financing, meaning it is in the second lien position on the house, and therefore does not affect the first mortgage lender's ability to persue the subject property in the event of a default on the loan. The thing to consider is that when you do this on a purchase, your first AND second mortgage lender will qualify you at the cumulative mortgage payment.
What is a sentence using the word subordinate?
A second mortgage has a subordinate interest to a first mortgage. The vice president is the president's subordinate. My desire for entertainment is subordinate to my need for food.
How do you mortgage subordinate?
You can't subordinate a mortgage. One bank, the senior lender, sometimes subordinates their mortgage to a bank who is giving the homeowner a new mortgage. The subordination gives the new mortgage first place and the old mortgage becomes the second mortgage.
Why does the second mortgage holder have to approve of the first mortgage refinance?
The second mortgage holder typically needs to approve the first mortgage refinance because they hold a subordinate position to the first mortgage. Refinancing the first mortgage could impact the second mortgage holder's position, so their consent is often required to make changes to the primary loan.
If you have a second loan on your mortgage can you refinance on just the primary loan?
Normally you can. You will have to get the Lender on the Second Mortgage to "SUBORDINATE" the loan for you. They may charge a small fee to do so. Your Title company can help you.
What reasons would a mortgage lender not want to be subordinate?
Because they will lose their position in collected if you default on your loan. To be subordinate would be in Second or Third position and if they had to foreclose, they would only get "what's left" after the 1st mortgage holder took theirs.
Why are interest rates on a 2nd mortgage higher than on a primary mortgage?
A second mortgage is generally riskier for a lender because the second mortgage is subordinate to the primary loan. This means that if the loan defaults, the first mortgage is paid off first and the lender risks losing the money put up for the second mortgage. To cover the extra risk, there is a higher interest rate placed on the second mortage.
What is subsiadiry account put example?
"Subsidiary" means "subordinate to" or "owned by", such as "Kraft Foods is a subsidiary of Nestle Foods" (not that that's the case, just an example of the phrasing.) A person's second mortgage is "subordinate to" the first mortgage, meaning paying off the first must take precedence over paying off the second.
If a bank refinances a first mortgage and there is a second mortgage on the property who does the first mortgage belong too?
The new bank in which the refinance mortgage loan has been taken from becomes the new owner of the first mortgage at the closing table. As for the second mortgage, the second mortgage holder remains the same. Before the first mortgage can close with the new lender, however, they must agree to re-subordinate the second mortgage along with their new one. It is not uncommon. I hope this information helps. Best of luck! Regards, Total Mortgage Services
What are the advantages and disadvantages of 100 percent financing however having a first mortgage and subfinancing in order to get 100 financing?
The advantage to having a first and second mortgage equalling 100% financing is that you would not have to pay PMI, which would be required on a first mortgage at 100%. The second mortgage is subordinate financing, meaning it is in the second lien position on the house, and therefore does not affect the first mortgage lender's ability to persue the subject property in the event of a default on the loan. The thing to consider is that when you do this on a purchase, your first AND second mortgage lender will qualify you at the cumulative mortgage payment.
If payments have been made to the second mortgage holder but not to the first Mortgage holder can the first mortgage holder reclaim any of those payments from the second mortgage holder?
No. However, in the case of a foreclosure sale (or any sale), the first lien holder will always be made whole (paid completely) before any sale proceeds are applied to the subordinate liens.
Why might a homeowner take out a second mortgage?
A homeowner take out a second mortgage if they are struggling to pay off their first mortgage. You can read more at www.bostonapartments.com/mortgage/second-mortgage/second-mortgage.html -
Can a first mortgage foreclose with a second?
Yes. The second is subordinate to the first mortgage and therefore is at greater risk. If equity exists, the 2nd mortgage holder may receive payment for the debt when a senior lender forecloses. If there is not, then their lien on the property is wiped out and they must pursue the borrower in another fashion (such as a lawsuit). If the 2nd mortgage lender does not want the 1st lender to foreclose, they may choose to pay the 1st mortgage current before the foreclosure proceeds and attempt to collect or foreclose themselves.
