What is the benefit to buyer clause for mortgages?
I spoke to a loan officer about refinancing my mortgage, and he spoke of a benefit to buyer clause that would not allow a mortgage to be refinanced unless there was a “benefit to the buyer”. Does anyone know more about this? Where can I find more info about this?
Tags: benefit, buyer, clause, Mortgages
It prevents a loan with worse terms to be executed and prevents you from non-disclosed terms in a refinance situation. Such as a fixed rate now of 6% going to a 5% loan with points added or balloon payments.
this is designed to prevent predatory lending. a loan must either represent benefit to the buyer by giving cash out, lowering payment, or changing the repayment term. if all of the factors are the same, and you can’t save money or receive money, or pay off the loan faster because of your proposed new mortgage….then there is no borrower benefit, and you won’t be able to get the loan.