Just when everyone thought the thunder of the refinancing boom had faded, mortgage interest rates dropped even lower this spring, sparking another explosion. Once again, people are rushing to grab rock-bottom rates for their home loans.

Amid the refinancing hullabaloo, one important point is often drowned out: If you've taken a second mortgage on your property (a home equity loan or line of credit), it must be subordinated when you refinance your first mortgage. The alternative is to pay off the second mortgage, but most people don't have the wherewithal to do that.

Although subordinating the second mortgage is supposed to be your lender's responsibility, you'll protect yourself by making sure the process begins immediately after you lock in the lower rate on your refinanced first mortgage. Otherwise, you might run out of time and lose your lock. If mortgage interest rates have gone up in the meantime, you will have missed your chance to save money, which is the whole point of refinancing in the first place.

Here's how it works: Let's say your house is worth $200,000. You have a first mortgage for $150,000 and a second mortgage, or home equity loan, for $20,000. According to the chain of title, the first mortgage is in the first position and the second mortgage is in the second position. But the minute the first mortgage is paid off with a new loan at a lower rate, the second mortgage levitates into the first position. Where will the new mortgage fit into this order? What position will it take?

According to title, the new first loan has to be in the first position, because it's subject to different rules and rates. But the new loan doesn't take the first position automatically.

To clear the way for the new loan to take the first position, you have to make sure the second mortgage stays in the second spot, by using a subordination agreement. This legally binding document freezes the position of the second mortgage in the second position, allowing the new, refinanced loan to leapfrog the second mortgage, pay off the first and assume the first position in the line of title.

You'd be surprised how often people fail to secure the subordination agreement in time, because they forget to mention that they have a second mortgage when they go to refinance their first. And unfortunately, many lenders don't ask. By the time they find out, it's often too late.