Loan Refinance

[Guest Hgreer]

Have a participant that took out a loan for purchasing a primary residence. At the time he figured he could pay it off in 5 years. He now is having a little financial difficulty and has asked if he can refinance the loan for a longer period of time than the 5 years so he can lower his payments a bit. Although it probably doesnt matter he is not looking to extend the loan for the 15 years but maybe for 10. Does anyone know if this is possible? Any help or direction is most appreciated. Thank you.

[Belgarath]

I think this should be generally allowable. HOWEVER - if the original loan was for 5 years or less, it is very possible that the Plan Administrator did not request documentation to determine that it was a "principal residence" loan. If it is refinanced and extended as a principal residence loan, then there should be very good documentation required to show that the original loan was in fact used to purchase a principal residence.

[ACox]

Does your Document or Loan Policy allow for refinancing of loans?

[Guest Hgreer]

I think this should be generally allowable. HOWEVER - if the original loan was for 5 years or less, it is very possible that the Plan Administrator did not request documentation to determine that it was a "principal residence" loan. If it is refinanced and extended as a principal residence loan, then there should be very good documentation required to show that the original loan was in fact used to purchase a principal residence.

Thank you!

[Guest Hgreer]

Does your Document or Loan Policy allow for refinancing of loans?

I does allow for refinance.