If you are thinking about or are in the process of refinacing your Sonoma County home and you need to ask the current holder of the second deed of trust for a Subrodination agreement, then be forewarned that as of June 31st, they will force you to lower your line amount to a 75% CLTV (combined loan to value). What that will force you to do is to consider the effects of a lowered line amount or may force to pay down the balance of the existing HELOC to the 75% level. Or what most borrowers will do is simply not be able to take advantage of lowering the rate on their first and not complete the refinance.
What makes matters worse is that you and your lender have put in a lot of time into gathering all the information necesary for the first loan. You have also paid upfront for an apprasial($400 to $600) and the lender of the second has had the audacity to ask you to pay a subordination agreement fee of 200$, which by the way is non refundable even though you may not be doing a subordination. Everyone in the process has gone through considerable effort only to find this out at the very end of the process.
And the worst part of the deal is that the new loan typically lowers your rate, thereby reducing your monthly payments. You might even be consolidating some other debt lowering your overall debt burden. By not allowing you to refinace the holder of the second is actually increasing the likelyhood of default on both the first and the second deed of trust. This just doesn’t make any sense. But what does these days in the lending industry.
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