You've decided to refinance your first mortgage, but you also carry a home-equity line of credit. That HELOC is currently in second lien position behind your existing first. The question: what happens to the line when you replace the first mortgage?
The three paths
You have three options. First, you can subordinate the HELOC—the line stays open and in place, and the HELOC lender formally agrees to let your new first mortgage take priority position ahead of it. Second, you can pay off the HELOC with proceeds from the new loan, closing the line entirely. Third, you can close the HELOC before or at closing and, if desired, reopen a new line later once the refinance settles.
How subordination works
Subordination requires the HELOC lender's written consent. Your refinance lender will order a subordination agreement, and the HELOC bank reviews the request. Cooperation varies: some lenders subordinate routinely within two weeks; others charge fees (commonly $50 to $250) or decline altogether if the combined loan-to-value is too high or if you've drawn the line close to its limit. Timing matters—subordination requests should begin as soon as you lock your rate, because delays can push closing dates or cause a lock to expire. These figures are illustrative; rates and products are subject to change and this is not a commitment to lend.
If the HELOC lender agrees, the line remains open with its original terms, rate, and available credit intact. You avoid a new credit inquiry and preserve the convenience of an open revolving line.
Paying off the line
Paying off the HELOC means rolling its balance into your new first-mortgage principal. Your new loan amount increases by the payoff figure, which may affect rate pricing slightly on a larger balance. Once paid, the line closes. This path makes sense if you no longer need revolving access, if subordination is denied, or if you want to simplify your debt structure into a single monthly payment. The tradeoff: you lose the line, and reopening a HELOC later requires a full application, appraisal, and underwriting review.
Closing and reopening
Some borrowers close the HELOC voluntarily before refinancing (especially if the balance is zero), then apply for a new line afterward. This avoids subordination delays but triggers a hard credit inquiry for the new HELOC and requires satisfying equity and income standards a second time. If credit markets tighten between closing the old line and applying for the new one, approval isn't guaranteed.
Credit-utilization and timing considerations
Keep in mind that open HELOCs affect your credit profile. High utilization on a revolving line can lower scores, even if you subordinate successfully. Conversely, closing an old trade line may shorten credit history. Plan the sequence with both your refinance timeline and your credit strategy in mind.
The Alliance take
Subordination usually offers the smoothest path when the HELOC lender cooperates and you value keeping that credit available. Paying off the line simplifies obligations but permanently removes flexibility unless you reopen later. Every scenario turns on loan-to-value, lender policies, and your own cash-flow goals. Discuss the mechanics and costs with your loan officer early in the process, so subordination requests or payoff instructions are timed correctly and your closing stays on schedule. Start an application to walk through your specific refinance structure.