A borrower wants to refinance their current mortgage to access $50,000 in cash for home improvements. The new loan will have a 0.25% higher interest rate but the same term. What additional documentation is required to demonstrate tangible net benefit?
Correct Answer
A) A written explanation of how the cash-out serves the borrower's financial interests
For cash-out refinances where the rate increases, the creditor must document how the cash-out amount serves the consumer's financial interests to establish tangible net benefit under the ATR rule.
Why This Is the Correct Answer
For cash-out refinances where the rate increases, the creditor must document how the cash-out amount serves the consumer's financial interests to establish tangible net benefit under the ATR rule.
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