Loan Refinancing

[austin3515]

Got a primary residence loan where the orignal term was 15 years. Currently, the loan will be fully repaid in 6 years. Is there any reason that this loan cannot be refinanced into a signle loan, repaid in 5 years, together with receiving additional proceeds of $X?

Great West is saying we can't., but I don't believe them!

[masteff]

You may run into a problem w/ reg Q&A-8. See the recent discussion here first: http://benefitslink.com/boards/index.php?showtopic=47022 Your situation differs because of the extra loan proceeds. That said, look at the part of Q&A-20 that says "This paragraph (a)(2) does not apply to a replacement loan if the terms of the replacement loan would satisfy section 72(p)(2) and this section determined as if the replacement loan consisted of two separate loans". Which in simplistic terms is to say, if the remainder of the original loan is paid off w/in its original terms and the "new" part of the loan is paid off w/in 5 years, then you should be okay.

I'd point them to that and make them explain why they still think it's not allowed.

[K2retire]

Some documents specify that loans cannot be refinanced. Could that be the issue?