Refi vs Cash out refi vs Home Improvement

Borrower requested loan to purchase 8 acres undeveloped land - with a cabin of no value per the appraisal.- Uninhabitable
Borrower decided to make improvements to the cabin out his own pocket (credit cards and savings)
Borrower is now requesting a cash out refinance of the original loan to pay off his credit card debt, replenish his savings and complete the improvements to this cabin, which now he is calling his second residence.
We did satisfy the land loan and replaced it - same borrower same property and also took a second on his primary residence as well. Does it make a difference that the mortgage we satisfied did not have a dwelling per se and now it does? The verbiage cash out refinance was worded as such on the application by the borrower. The proceeds of the new request will be used for completion of the improvements. Any assistance or direction will be appreciated

Do you have separate products for a refi vs cash out refinance? A refi trumps home improvement and the current obligation is a dwelling-secured debt obligation regardless of whether you considered that there was a dwelling on the property when the original loan was made.

Thank you for your response. No, we don't have separate products for a refi vs cash out refi. We would have just called it a refinance. I was getting stuck on " closed end mortgage loan in which a new dwelling-secured debt obligation satisfied and replaces an existing dwelling secured debt obligation by the same borrower. " We did not view the original mortgage as being dwelling secured. The new loan application states the purpose as cash out refi to complete home improvements.

"We did not view the original mortgage as being dwelling secured"

So you excluded existing or future improvements from your original deed of trust? If not, then it would my opinion that you are replacing an existing dwelling secured debt obligation by the same borrower.

And don't get too hung up on what the applicant calls it, they don't read definitions.

Your bank does not have a cash out refi product, so that's out.

Agree with Randy, you made him a loan for the dirt which is now improved property. This is a dwelling secured loan that satisfies and replaces a dwelling secured (improved property) loan.

Refi trumps HI.