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A lot of Orlando homeowners have both a primary mortgage and a second mortgage or home equity line of credit. A few years ago 80/20 loans were very popular, where 80% of the home's value was borrowed with a first mortgage, and the outstanding 20% was borrowed with an additional mortgage. This allowed 100% financing without paying private home loan insurance, and was usually offered by banks and mortgage lenders throughout the country. A second mortgage or home equity line can also be taken out after the purchase so that you can make use of the equity in a home without refinancing. This too was an extremely common practice in recent years as property prices climbed quickly in many regions of the US.

Today's cheap Orlando mortgage rates have many homeowners interested in refinancing. If you're one of the many with a second home loan you may be thinking, what will happen to that loan during the refinance?

Normally you have two alternatives: pay off the second mortgage or subordinate it.

The first option involves taking out one larger loan which will pay off both your current first and second mortgages. 100% funding is tougher to come by these days, so you most likely need to have some capital in the home to be eligible for one mortgage with a higher loan amount.

The other option, subordinating the second mortgage, means that you will keep the mortgage active and refinance simply the first mortgage. Even if you are eligible for a mortgage that would settle the second loan along with the first, you may prefer to hold onto it due to a particularly low interest rate, or to maintain an open equity line you may take advantage of if needed in the future. To be able to subordinate the loan the lender who holds the second mortgage must agree to take second lien position, meaning they might be repaid after the holder of the first home loan in the event of a foreclosure.

A lot of second mortgage lenders will agree to a subordination and offer the subordination agreement required to move forward with the refinance. It can however take some time to receive so this should be accounted for when planning the time line of your Orlando refinance.

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