Under the new rules for mortgages, when refinancing a home loan, there must be a reasonable and tangible benefit to the borrower. In other words, you can’t just refi for the hell of it- but why would you want to?

 

You wouldn’t, but sometimes it appears to be the right thing to do. So, as the banks try to protect the borrowers even more from scrupulous loan officers, frivolous refinances and of course, themselves, there is a test to be passed. It’s good, because it makes the borrower give a second peak and thought at what they are doing. It is bad, because it is really just another stupid form for the borrowers to have to complete so the lender can cover their own butt.

 

Reasonable and tangible benefits (check as many as apply):

 

·        Lower interest rate

·        Lower monthly payment

·        Short loan term

·        Consolidate debts

·        Get a fixed rate

·        Refi due to balloon payment on existing note

·        Avoid foreclosure

·        Get cash out

·        Other ___________

 

 

Here are few more things the lender needs you to confirm.

 

Sign below if you understand the following:

 

The borrower needs to understand that there are costs involved with the closing and the terms are different from the old loan (duh)

That the borrower is sure that the refi will provide a reasonable and tangible benefit to one’s self (do the math)

That the borrower is allowing the lender to make the loan based on this understanding (cover butt)

 

I agree:

  Joe the Plumber

 

Welcome to the second full week of the year. May it be a good one.

 

 

 

Dale Siegel