FHA allows homeowners to subordinate their existing second mortgage to a new first FHA loan.Subordinating is simply a fancy mortgage term for letting the first lender skip in line on the title.However, if the HELOC or second mortgage was taken out after the original mortgage, it would be termed as a cash-out refinance, which has a separate set of guidelines on loan to value.Providing you have the home equity available, you may be able to secure a piggyback mortgage that is a combination of a first and second mortgage or HELOC from the new bank.
The home must have at least 15 percent equity at closing to qualify.
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Homeowners can combine their first and second mortgages into one mortgage insured by the Federal Housing Administration.
This program allows homeowners to consolidate their first and second mortgages, as long as a second mortgages is at least 12 months old or was used to purchase a home.
The homeowner also finances the closing costs and any prepayment penalties charged by the current lenders.