A borrower wants to refinance their 4.5% fixed-rate mortgage to access $75,000 in home equity for their child's college tuition. The new loan would be at 5.0%. Which statement is most accurate regarding tangible net benefit?
Correct Answer
B) The educational purpose could support a tangible net benefit finding
Under 12 CFR 1026.43(e)(3), tangible net benefit analysis considers the borrower's circumstances and the purpose of the transaction. Educational expenses can represent a legitimate financial benefit that supports a tangible net benefit determination, even with a slightly higher rate.
Why This Is the Correct Answer
Under 12 CFR 1026.43(e)(3), tangible net benefit analysis considers the borrower's circumstances and the purpose of the transaction. Educational expenses can represent a legitimate financial benefit that supports a tangible net benefit determination, even with a slightly higher rate.
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