We are going to refinance a rental property around 40k and pay off personal credit cards of around 28k- the main purpose of the loan is to get rid of the personal debt. Is this a consumer loan purpose or do we way the amount of the refinance of the rental property? Thanks.

The funds are being used for a personal, family or household purpose. It's a consumer credit extension, subject to Regulation Z. If it's closed-end credit, it will be subject to the TRID rules due to the collateral.

I'm curious John....if the rent home in question was set up on a 5 year balloon and the balloon was coming due and the borrower wanted to refinance it with cash out, would your opinion change in any way? Would you be interested in the split of funds in that scenario?

I'd look at the purpose of the transaction. If there are both business and personal purposes, I'd go with the one with the majority of bucks. If it's 50/50, I'd go back to bed for the day or ask the applicant to spend one less dollar on the personal side.

Ok...thanks. I was a bit confused by the original post: if $40,000 is the amount of the loan and $28,000 is going towards paying off personal debt, i guess i don't understand the "weighing of the refinance of the rental property" part of the question.

The 40k is going to pay off the rental property and the 28k is paying off personal credit cards. The purpose down is to pay off personal credit cards. The rental property will secure the loan. Thanks John.

Oh ok...i thought the total amount of the loan was $40k and $28k of that was to pay off credit cards. I see two competing purposes (one consumer, one business) here, which is why i asked for the clarification. I'd be curious if this fits John's split purpose scenario in his mind.

I think it would, assuming the business is still operating.