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  1. #1

    Default Constantly Refinancing

    Could someone please give me the details on "Churning."

    Can this be avoided in buying a house?

    To the best my my knowledge "churning" is the seller or lender making a deal for X amount of money at X amount of interest for X amount of years but every few years the buyer is forced to refinance which in essence is literally changing the sale price of the property after the fact and if the buyer refuses to refinance they lose the property.

    I was told that "churning" is unethical and serves no purpose but to add fees to the buyer after the fact and more profit to the seller or lender after the fact?

  2. #2
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    Default Re: Constantly Refinancing

    Why don't you tell us exactly what is happening, and belatedly tell us what state is involved, so we have appropriate context to try to answer.

  3. #3

    Default Re: Constantly Refinancing

    Quote Quoting Mr. Knowitall
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    Why don't you tell us exactly what is happening, and belatedly tell us what state is involved, so we have appropriate context to try to answer.
    Hi. Thanks for responding.

    Sorry I forgot the Tennessee part.

    I'm offered to buy a house with a ten year mortgage refinanced every 3 years.

    Why can't they just make a deal and leave it for 10 years?

    Refinancing every 3 years only adds fees to the buyer and increases the interest rate doesn't it?

    They said that refinancing isn't an option for me every 3 years but is a mandatory part of the agreement.

  4. #4
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    Default Re: Constantly Refinancing

    I still don't know what you're trying to ask.

    I very much doubt that the contract of sale requires you to refinance every three years and, even if it did, I have no reason to believe that such a clause would be enforceable.

    Often a land contract or seller-financed transaction will require the buyer to refinance after a fixed period of time, such as three years, so that the seller receives the balance of the money he's owed.

    Obviously, once a loan is paid off, it is no longer relevant to the residence. If you refinance to pay off a loan that requires you to refinance every three years (a perfectly silly clause to include in a mortgage), the new mortgage contract would govern, not the old one.

  5. #5

    Default Re: Constantly Refinancing

    Quote Quoting Mr. Knowitall
    View Post
    I still don't know what you're trying to ask.

    I very much doubt that the contract of sale requires you to refinance every three years and, even if it did, I have no reason to believe that such a clause would be enforceable.

    Often a land contract or seller-financed transaction will require the buyer to refinance after a fixed period of time, such as three years, so that the seller receives the balance of the money he's owed.

    Obviously, once a loan is paid off, it is no longer relevant to the residence. If you refinance to pay off a loan that requires you to refinance every three years (a perfectly silly clause to include in a mortgage), the new mortgage contract would govern, not the old one.
    So you're saying that if they want me to refinance every 3 years on a 10 year mortgage it is because they were the initial creditors of the funds, the first refinance pays them off?

    If so doesn't that mean that I need a new mortgage lender every 3 years in order to finish off the 10 year mortgage?

    What if I talk to them and they say that they will be the creditor every 3 years?

    I think that is where the "churning" comes in if they are going to be the creditor in every instance of refinance.

    If one must refinance every three years on a 10 year mortgage doesn't that mean that right up front 2/3's of the mortgage is not backed or is in limbo?

    The following is showing up as an edit to this post when I didn't select that function.

    I think this is it, I'm not sure:

    Mortgage glossary:

    Loan "churning"

    http://www.mtgprofessor.com/glossary.htm

    Periodic Mortgage Refinancings: Who Gets Conned?

    http://www.mtgprofessor.com/A%20-%20...ets_conned.htm

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