Subordination
The act of placing or moving a lien into a lower priority position relative to other liens on the same property.
When you refinance a first mortgage on a home that also has a HELOC or second mortgage, the existing junior lien needs to be subordinated, formally agreed to stay in second position behind the new first mortgage being placed. Without subordination, the junior lender's claim would technically jump to first position when the original first is paid off, which isn't what either side wants.
Subordination agreements are typically processed by the junior lien holder for a fee, and approval depends on their assessment of the new loan terms. Most major HELOC providers handle this routinely; smaller second mortgage holders sometimes require more documentation.
Plan for subordination in your refinance timeline. Some servicers process it in days, others take weeks. Knowing this up front avoids closing-day surprises when the new lender realizes the existing HELOC hasn't been formally subordinated yet.
Related terms
Other terms you'll see alongside Subordination
A revolving credit line secured by your home's equity, with a variable rate and draw period followed by repayment.
A legal claim against property that secures a debt and must be paid off before clear title can transfer.
Replacing an existing mortgage with a new one, typically to lower the rate, change the term, or extract equity.
The asset pledged to secure a loan, which the lender can take and sell if the borrower defaults.
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