Question

Real Estate Finance

1. What are the primary considerations that should be made when refinancing?

Please elaborate by expressing your thoughts about your findings in at least 3 – 4 sentences.

2.

Assuming the borrower is in no danger of default, under what conditions might a lender be willing to accept a lesser amount from a borrower than the outstanding balance of a loan and still consider the loan paid in full?

Please elaborate by expressing your thoughts about your findings in at least 3 – 4 sentences.

Answer 1

1: When refinancing the following should be considered:

a:The refinancing costs such as origination cost.

b: The appraisal and credit reports cost

c: The closing costs and the new rate of financing.

2: The lender may accept a lesser amount If the market rates have risen significantly. This will render the present value of the loan less. The lender can then take a lesser amount to close the loan and reissue the loan at the new market rates of interest which will be higher.