A borrower has two mortgages on their property: a first mortgage of $200,000 and a second mortgage of $75,000. They want to refinance only the first mortgage to $210,000 for better terms, leaving the second mortgage in place. How is this transaction classified?
Correct Answer
B) Rate-and-term refinance because they're only refinancing one mortgage and the increase covers closing costs
This is classified as a rate-and-term refinance under TRID regulations. The classification is based on the relationship between the new loan and the specific mortgage being refinanced (the first mortgage), not the total debt on the property. Since the $10,000 increase likely covers closing costs, it remains rate-and-term.
Why This Is the Correct Answer
This is classified as a rate-and-term refinance under TRID regulations. The classification is based on the relationship between the new loan and the specific mortgage being refinanced (the first mortgage), not the total debt on the property. Since the $10,000 increase likely covers closing costs, it remains rate-and-term.
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