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Is it correct that the use of the collateral does not change the purpose of the loan. For example if a customer refinances a consumer purpose mortgage with no new money is the purpose still consumer even though the property is now being rented? Also if a loan secured by the customer’s primary residence used for their business is later refinanced with no new money is it still business purpose? I know if they were unsecured the type of loan being paid off would probably determine the purpose.
I apologize for the delay in responding. Our forum has been down since Friday afternoon due to technology issues. We believe we now have the problem corrected.
To answer your question, it will depend on the loan purpose, not the collateral. You will need to re-evaluate the purpose (business or consumer) at the time the refinance is being done.
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