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Home Equity or Refinance?

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Question: 
Is this home equity or refinance? In 2016, dad took out a home equity loan with the bank so his son could make some improvements to the house. His son was not on the loan nor on title at the time. The farm property was transferred to the son (our new borrower) at the beginning of the year. The son wants to payoff dad’s loan with us ($42K) plus borrow additional for more improvements for a final loan amount of $150K.
Answer: 

If this is a TRID question, the loan would be classified as a home equity. A refinancing occurs when an existing obligation that was subject to the closed-end Regulation Z rules is satisfied and replaced by a new obligation undertaken by the same consumer. The same consumer is not involved in the loan that is being paid off.

First published on 04/22/2018

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