Wells Fargo Home Mortgage Subordination Agreement: What You Need to Know
For many Americans, home ownership is a dream come true. However, as life circumstances change, homeowners may need to access the equity in their homes to cover large expenses, such as home renovations or college tuition. This is where a subordination agreement can come into play.
A subordination agreement is a legal contract that allows a homeowner to take out a second mortgage while keeping the first mortgage intact. The first mortgage has priority over the second mortgage, so in the event of a default, the first mortgage lender will have the right to foreclose on the property and seek repayment before the second mortgage lender.
Wells Fargo Home Mortgage is one of the largest mortgage lenders in the United States, and they offer subordination agreements to eligible customers. Here`s what you need to know if you`re considering a Wells Fargo Home Mortgage subordination agreement.
Eligibility Requirements
To be eligible for a subordination agreement, you must have an existing first mortgage with Wells Fargo Home Mortgage and be taking out a second mortgage with a different lender. The second mortgage must be for a specific purpose, such as home improvements or debt consolidation, and cannot be used for investment purposes. Additionally, you must meet Wells Fargo Home Mortgage`s credit and income requirements.
Process
To begin the subordination process, you`ll need to submit an application and pay a processing fee. Wells Fargo Home Mortgage will review your application and may request additional documentation, such as proof of income and a copy of your second mortgage agreement. If approved, Wells Fargo Home Mortgage will prepare a subordination agreement that outlines the terms and conditions of the agreement.
Fees and Costs
In addition to the processing fee, there may be other fees and costs associated with a subordination agreement. These may include appraisal fees, credit report fees, and attorney fees. It`s important to review the terms and fees carefully before signing the agreement.
Benefits and Drawbacks
The primary benefit of a subordination agreement is that it allows you to access the equity in your home without refinancing your first mortgage. This can be especially helpful if you have a low interest rate on your first mortgage that you don`t want to lose. However, a subordination agreement also has drawbacks. It can be more expensive than refinancing, and it can make it more difficult to sell your home in the future.
Overall, a Wells Fargo Home Mortgage subordination agreement may be a good option if you need to access the equity in your home and want to maintain your first mortgage. However, it`s important to carefully consider the costs and benefits and to speak with a financial advisor before making any decisions.