A borrower has a mortgage with a 5-year balloon payment due. They want to refinance before the balloon payment is due, keeping the same loan amount but extending the term to 30 years. No cash will be received except for a small refund of escrow funds. How is this classified?
Correct Answer
B) Rate-and-term refinance because they're only changing the loan terms
This is a rate-and-term refinance under TRID regulations. The transaction's primary purpose is to change loan terms (extending maturity), and escrow refunds don't count as cash-out proceeds. The borrower is not receiving cash beyond closing costs and normal escrow adjustments.
Why This Is the Correct Answer
This is a rate-and-term refinance under TRID regulations. The transaction's primary purpose is to change loan terms (extending maturity), and escrow refunds don't count as cash-out proceeds. The borrower is not receiving cash beyond closing costs and normal escrow adjustments.
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