When it comes to taking out a mortgage or borrowing against the equity in your home, a subordination agreement is an important document to understand. This is particularly true if you have multiple mortgages or other liens against your home. One lender that offers subordination agreements is Bank of the West.
What is a subordination agreement?
A subordination agreement is a legal document that establishes the priority of various liens on a property. In the context of a mortgage, a subordination agreement is used when a borrower wants to take out a second mortgage or home equity loan against their property. The agreement establishes that the first mortgage (the primary lien) takes priority over any subsequent mortgages or liens.
Why is a subordination agreement important?
When you take out a mortgage, the lender will place a lien on your property that gives them the legal right to take possession and sell the property if you fail to make your payments. If you later take out a second mortgage or home equity loan, that lender would have a secondary lien on the property. If you were to default on your payments, the first mortgage lender would have the first claim to the proceeds from a sale of the property, leaving the secondary lender with potentially little or no recourse.
By signing a subordination agreement, the secondary lender agrees to subordinate their lien to the primary lien. This means that if the property is sold or foreclosed upon, the primary lender would be paid first, and any remaining proceeds would be used to satisfy the secondary lien.
What is Bank of the West`s subordination agreement?
Bank of the West offers a subordination agreement that allows borrowers to take out a second mortgage or home equity loan while still maintaining the first mortgage with Bank of the West. The agreement establishes that Bank of the West`s first mortgage takes priority over any subsequent liens against the property.
To obtain a subordination agreement from Bank of the West, borrowers must provide information about the second lien, including the lender`s name, the amount of the loan, and the purpose of the loan. Bank of the West will review the request and determine whether to approve the subordination agreement.
In conclusion, a subordination agreement is an important legal document that establishes the priority of various liens on a property. If you are considering taking out a second mortgage or home equity loan, it is important to understand the terms of any subordination agreement that may be required. Bank of the West`s subordination agreement is one option available to borrowers, but it is important to compare options and understand the terms and conditions of any subordination agreement before signing.