How are existing liens paid off or subordinated at closing?

To deliver the lender a first-position lien, the title and escrow company clears competing claims at closing. It orders official payoff statements from existing mortgage holders and lienholders, showing the exact balance through the closing date, then pays them directly from the transaction’s funds and obtains and records the releases or reconveyances. If a junior lien such as a home equity line is going to remain (common in some refinances), the new lender typically requires a subordination agreement so its loan keeps priority over that junior lien. The escrow officer coordinates the payoffs, releases, and any subordinations, and the title policy then insures the lender’s lien in the agreed priority. Accurate, timely payoff figures are essential, which is why they’re requested early.