Many homeowners watch interest rates closely. When mortgage interest rates fall low enough, they rush to call their lenders for a refinance. This is little surprise: Homeowners, depending on the size of their home loans, can save more than $120 a month if a refinance drops their mortgage interest rate from 6 percent to 5 percent. But refinancing can be complicated for those homeowners who have a second mortgage loan on their properties. They'll need to subordinate that loan, and they'll have to get permission from the servicer of that loan to do it.
Instructions
1. Call the servicer of your second mortgage loan. You can find its telephone number on your most recent second mortgage loan statement.
2. Tell the servicer that you you are interested in refinancing your existing two loans into a single loan with a lower interest rate. Explain that you need the servicer of your second mortgage loan to agree to subordinate the loan. Basically, this means that the servicer of this loan agrees to be second in line, behind the servicer of your first mortgage loan, to receive the money owed to it when you complete a mortgage refinance. This lender will send you a subordination agreement document if it agrees to subordinate.
3. Call the servicer of your first mortgage loan if the holder of your second loan agrees to the subordination. Tell this servicer that you are interested in refinancing, and that the holder of your second mortgage loan has agreed to subordinate.
4. Send the lender or bank servicing your first mortgage loan the financial paperwork proving that you have a stable, reliable income and a reasonable amount of debt. This includes copies of your most recent paychecks, federal income tax returns, credit-card statements, other loan statements and savings and checking account statements. Also send this lender the subordination agreement you received from the servicer of your second mortgage loan.
5. Give your lender permission to run a credit check on you and an appraisal of your residence. Both of these are necessary for a refinance: the credit check to make sure you don't have a history of defaulting on loans and the appraisal to make sure that the value of your home hasn't dropped significantly, reducing the amount of equity you own in it.
6. If your lender refuses your request for a refinance, call around to other lenders. You are not required to refinance through the lender holding your first mortgage. You can even refinance with the lender servicing your second mortgage loan.
7. Sign the closing documents, which the lender handling your refinance will provide to you, to make your refinance official.
