Question by Anthony J: Can I refinance my mortgage without having to payoff my home equity line of credit balance?
I have a mortgage & home equity line of credit with the same lender. The rate on the equity loan is currently 2.5% (prime – 3/4). I was thinking of refinancing my mortgage and taking out a little cash to pay off some credit cards. My question is, if I refinance my mortgage do I have to pay off the balance on my home equity loan?
Answer by acermill
Yes, you will need to pay it off. You won’t get a refinance with an existing lien against your house.
What do you think? Answer below!
No you don’t have to pay off the second, you just have to ask them to do a subordination. Whether or not they will in the current economy is another story, but yes it can be done.
As Professional Peon says it’s legal but difficult. Did your bank say they wouldn’t do it? If you have enough equity you could refinance and get another HELOC from another bank.
Call a few lenders and ask.
no you will not have to pay it off.but and it is a big but! banks have been trying very hard to tighten up their exposures to risks, and having a equity
line of credit now days is considered a risk.so the holder of second loan
(equity line) may not agree for subordination,even though they are the
same bank. they may also not allow you to take cash out. unless there is
substantial equity exist.your best chance is going to be refinancing with
the same lender,and before spending any money,you need to make certain
that the line of credit holder is willing to subordinate.
Yes, you can. I just did this with my Wells Fargo mortgage. It was my choice when I refinanced my mortgage whether I wanted to roll in my home equity line or keep it open. I had a decent rate (but not as great as yours–wow!) and I chose to keep it open. The bank made no big deal out of it one way or the other, and although I have pretty good credit, I had a very large balance on it, more than $ 350k.