When trying to refinance your second mortgage, there are a number of points that you’ll have to keep in mind if you want to be successful.

Some of them are:

• Pay back your second mortgage.
• Have both the mortgages consolidated by the second mortgage lender.
• Drop the idea of having your second mortgage refinanced altogether.

This is because refinancing your home equity line of credit (HELOC) or home equity loan will further complicate the process of refinancing your second mortgage and may make the approval process all the more difficult. And no one wants that.

The second mortgage holder must agree to take the place of the first mortgage holder, once the first mortgage is refinanced, and cede their position to the refinance lender. Here, you’ll have to reach out for an agreement known as re-subordination.

Many mortgage re-financers opt for the re-subordination path, even if it is time-consuming and costly. It must be noted here that re-subordination rules are different in case of loans that originate out of the Home Affordable Refinance Program (HARP).

The re-subordination process will cost both time and money

It is the responsibility of the lender to submit a written subordination request with all the necessary supporting documents before he can have the primary mortgage refinanced.

Normally, second mortgage lenders charge a fee of $75 to $100 to study the subordination package. The second mortgage lender may take up to six weeks to send his feedback back to you. To get a detailed guide about the second mortgage process, you can visit this page www.mortgagefit.com/second-mortgage.html and get a clear picture.

Except for some kind of doubts about a particular property’s value, re-subordination requests sent to second lien holders are rarely denied. However, if there are any issues, the credit union or bank itself won’t send the concerned prospective mortgage re-financer’s request in the first place.

In case the loan-to-value doesn’t work out upfront, credit unions or banks won’t recommend you and you’ll know where you stand at that point.

Alternatives when re-subordination request is rejected

If you are denied, we recommend paying off the second mortgage loan in full.

When you refinance your home, you’re basically applying for a fresh mortgage loan which means there are ample chances for you to get disqualified while trying to refinance your second mortgage due to existing credit guidelines that have become more stringent compared to when you took out the original mortgages.

That’s why you should compare the monthly payments and overall interest that you’re likely to pay over the term of the new refinanced mortgage loan compared with what you’re paying now.