HELOC in third position ?

[Larry Garber]

I just discovered my credit union will not allow the HELOC I applied for to take a 3rd position. Are there banks that DO allow this ?

[Tim Hendricks]

@Mike Gel It's the priority / order of who gets paid in the event of a default & foreclosure sale. The 1st lienholder will recover all of their money first. If there is any left after that, the 2nd lienholder is then in line, and so on.

Most mortgage companies want to be in 1st position, and therefore have the greatest chance in recovering their money in the event of a default. Typically loans in a 2nd position would have a higher interest rate, to compensate for the extra risk by being in 2nd position.

I don't know of any lender that would take a 3rd lien position @Larry Garber. If there's sufficient equity, why not take a larger HELOC in 2nd position and use the proceeds to retire the existing 2nd lien?