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#2002062 - 03/17/15 04:48 PM Loan purpose
donnac Offline
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Is the following correct for determining purpose? It appears from reading .37(a)(9)that everying is tied to the collateral.

Purchase - Must be purchasing the property that is securing the loan.

Refinance - Must be refinancing the same property that is securing the new loan.

Construction - Must be ground up construction of the property being taken as collateral.

Home equity - everything other than a purchase, refinance or construction loan.

So, if I'm purchasing a new home & only securing it with an existing home (& not the new home), it would be a home equity loan?

Thanks.

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#2002146 - 03/17/15 07:09 PM Re: Loan purpose donnac
ahou Offline
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ahou
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That's the way I read it.
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#2002186 - 03/17/15 08:13 PM Re: Loan purpose donnac
Rdy2Retire Offline
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Posts: 117
GA Mountains
I tried to post a question related to this yesterday and had issues with posting, so am going to jump on the wagon here.

What about a construction loan where part of the proceeds are to purchase the land where the dwelling will be built. Purchase or Construction??

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#2002229 - 03/17/15 10:36 PM Re: Loan purpose donnac
ahou Offline
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ahou
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It would be a purchase loan. It seems that purchase trumps refi and construction.
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#2002270 - 03/18/15 12:43 PM Re: Loan purpose donnac
John Burnett Offline
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Cape Cod
When you read the rule, you see that it is very much like a decision tree. If the loan fits the first option, that is the one you must use, and you stop the decision tree. That's how home equity becomes the dumping ground for everything that doesn't fit one of the first three categories.
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#2002328 - 03/18/15 03:25 PM Re: Loan purpose donnac
ahou Offline
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ahou
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Thanks for clarifying John.
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#2002439 - 03/18/15 06:17 PM Re: Loan purpose donnac
Rdy2Retire Offline
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Joined: Dec 2004
Posts: 117
GA Mountains
Yes, thank you very much!

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