How Do I Subordinate My Second Mortgage?

Subordination Secrets, How to subordinate your second mortgage, how do I subordinate my second mortgage, Tips to help you subordinate your second mortgage

How Do I Subordinate My Second Mortgage?

The subordination process differs between every lender, although there are clear similarities. The procedure is determined by whichever bank/lender currently holds your second mortgage.

Subordination are typically smoother and faster with small credit unions versus large national banks.

Step 1.Ask your Loan Officer how to Subordinate your Second Mortgage

Step 2.Wait for your Loan Officer to receive a Lender Subordination Checklist and Requirements. It is always advisable to request an up-to date subordination checklist as requirements often change.

Step 3. Gather documents. In most cases your Loan Officer will already have everything he needs except your basic signatures on a Subordination Request. In some cases your loan officer can simply use your borrower authorization form from your loan application as your consent for a subordination. The most common documents needed are as follows: a Subordination Request, Subordination Agreement prepared by the Title Company, 1003 basic loan application form, Copy of your Appraisal, and Prelim title docs.

Step 4. Work with your Loan Officer to ensure you are in compliance. Many lenders use approximately 55% Debt to Income (DTI), and 90% Combined Loan to Value (CLTV) as your max allowed ratios. DTI simply measures how much you make gross on a monthly basis versus your monthly reported debt. CLTV is the total amount of both loans applied against the value of your home (For example an 80 grand loan on a 100 grand house has an 80% Loan to value, if your second mortgage is 10 grand your CLTV will be 90%)

Step 5. Read the fine print. Many lenders require subordination fees and charge for expedited processing. Timeline is 1 -90 days depending on your lender. Negotiate and work with your Loan officer to ensure a timely mortgage transaction.

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