Subordination Clause and Home Equity Loan

alspeirs | 9:21 am | March 25, 2008 | finance

Different lenders have different rules but most of them agree that a subordination clause means the first mortgage company you have worked with must be willing to agree that the second mortgage you are seeking to obtain will be placed in first lien position. In case a foreclosure happens, the new loan is the one who has priority. If you pay off your first mortgage in the future the lender that is the head of your second mortgage is able to write a fresh first mortgage and make it the one in first lien position. This will help your interest rate because the second mortgage is higher.