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Add signatory Subordination Agreement

if you've ever heard the term subordination in real estate and you're not sure what it is or how it works keep watching this is trevor and in this video i'm here to teach you about subordination how it works what it's used for why it's necessary and who uses it i'll also give you an example so if you have any questions just leave me a note in the comments below and don't forget to subscribe this information is critical for any real estate or mortgage professional to understand as well as anyone looking to refinance their property especially when they have two mortgage loans such as a 30-year home loan and a home equity line of credit after this video you'll understand how subordination agreements work how they're executed who are the parties involved and what you need to know when dealing with one in order to understand how subordination works first we need to understand the concept of lien position when somebody takes out a mortgage loan the lender records a lien on the property this lien creates a public record that pledges the property as security or collateral on the loan when a property has multiple liens such as in the case of a home mortgage loan and a home equity line of credit the liens are prioritized in order of when the lien was recorded a lien that was recorded first is considered a senior lien and any liens recorded after that are considered junior liens so what does this matter well in the event of foreclosure or bankruptcy if the property has to be sold the proceeds from that sale that are used to pay off the creditors are paid in order of lien position so the senior lender gets paid first and then if there are any proceeds left over then the first junior lien holder will get paid and so on after the senior lender's been paid if there aren't enough proceeds to satisfy the lien for the junior lender the lien is extinguished and the junior lean holder needs to pursue other means to collect from the borrower this is the reason why second mortgages usually have a higher interest rate than a first mortgage because the second lien holder needs to be compensated for the higher risk due to their junior lean position subordination comes into play when a borrower wants to refinance their first mortgage after a second mortgage or a home equity line has been put in place let's use an example of a homeowner who takes out a 30-year fixed-rate loan then a couple years later they take out a home equity line of credit let's say after a few years the borrower wants to refinance their 30-year loan with a new loan because say interest rates went down if the borrower wants to refinance their original loan then the new loan would technically now be junior to the home equity line of credit typically the new...