Contruction-Perm loan "Refi"

Posted By: Many Hats

Contruction-Perm loan "Refi" - 02/27/13 06:10 PM

If we do a loan that is essentially a refinance of an exisitng construction to perm loan from another bank (and the construction is not yet complete - only 90% and no CO yet), is it reported as a refinance or a purchase?
Posted By: raitchjay

Re: Contruction-Perm loan "Refi" - 02/27/13 06:17 PM

I misread your post the first time. What is "CO" in this context? This is interesting actually; i think the argument could be made that while it's definitely a refinance, it is also still a purchase since the construction isn't yet complete and presumably your funds will be used to purchase materials that will finish the construction. I'd lean towards categorizing it as a purchase. ETA: i realize your loan isn't replacing a construction-only loan but instead is a construction-perm replacing a construction-perm....it's the fact that the home isn't actually built (at least not totally) yet that would make me lean towards calling it a purchase.
Posted By: Many Hats

Re: Contruction-Perm loan "Refi" - 02/27/13 06:17 PM

CO - Certificate of Occupancy
Posted By: raitchjay

Re: Contruction-Perm loan "Refi" - 02/27/13 06:21 PM

I think it's a purchase. Your loan is still for construction and construction equates to buying the home.
Posted By: Dan Persfull

Re: Contruction-Perm loan "Refi" - 02/27/13 06:33 PM

a refinance of an exisitng construction to perm loan from another bank

Are you:

1. Converting a construction loan to permanent financing, or

2. Refinancing a construction/permanent loan?

If:

1. Report as a home purchase.

2. Report as a refinancing.
Posted By: Many Hats

Re: Contruction-Perm loan "Refi" - 02/27/13 06:34 PM

Doing both....refinancing the contruction to perm loan at another bank and doing another construction to perm loan (to finish the construction) and will be doing the permanent financing as well.
Posted By: Dan Persfull

Re: Contruction-Perm loan "Refi" - 02/27/13 06:37 PM

In that case it's a home purchase.