Cash out refi allowed on a house that already has a HELOC?

[Vinay Kolluru]

If I have a house that is paid off and has a HELOC on it, would I be allowed to do a cash out refinance on that same house?

Since there is no primary mortgage, I think the HELOC would be in 1st lien postion and the new cash out refinance would be in 2nd lien position.

[Patrick M Nichols]

The new mortgagor would likely condition the financing on the closure of the HELOC and release of their lien. You might even get a better rate with the cash-out than you have with the HELOC.

However, yes, the general rule is that first in time to record is first in priority for liens, unless the senior lienholder agrees to subordinate their lien to a more recently recorded lien.