We liked the post on Ilyce’s website regarding refinancing a home equity loan. We live in Texas and have a 15-year home equity loan with an approximate loan to value ratio of just about 50 percent.

In Texas you can only have one home equity loan. We want to find a bank that will give us a first mortgage but keep the current home equity line of credit so that we can use it in the future. We do not want to refinance the home equity loan, but replace it and yet we cannot get the banks to understand what we want to do. Do you have any ideas?

We understand your problem and hear you, but it’s unlikely that you’ll find a bank willing to help you out. You must like your home equity loan and the interest it carries. We know that many people once had home equity lines of credit with an interest rate of 1 percent below the Prime Rate or better. If the Prime Rate was 3 percent, the interest rate on the loan would be 2 percent. But those loans were in the days when interest rates were much, much higher.

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Now, however, with interest rates at historically low levels, equity line interest rates are much above the Prime Rate. So, while you might love your equity line, you probably won’t find as good a deal today on an equity line. And if you want to keep the line and are looking for a home mortgage, the new lender will only give you the mortgage if the equity line lender agrees to subordinate its loan to the new loan.

That means that the new lender wants to be in the first lien position and have a shot at repayment first over the equity loan lender. Depending on your equity loan lender, the equity lender may refuse to subordinate its position to the new lender. The equity lender may require the loan to be repaid and closed rather than to subordinate the loan. The new loan could be for up to 80 percent of the value of the home. While we don’t think you should try to get that much money out of the home, you may have the ability to do so.

You can talk to a mortgage lender or mortgage broker and see what products and options they have for you. You may find that you have many more options to choose from once you leave behind your old home equity line and consider the new options available to you today.

Ilyce Glink is the creator of an 18-part webinar + ebook series called “The Intentional Investor: How to be wildly successful in real estate” as well as the author of many books on real estate. She also hosts the “Real Estate Minute” on her YouTube channel. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them at ThinkGlink.com.

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