Last year I took out a loan from a bank using one of my properties that had no mortgage on it. It's a fixed loan with fixed payments. It was to pay emergency bills. I only have a few years to pay it off as everything is going smoothly right now.
I just received a letter from the bank stating they are updated their files and are requesting from me, an updated completed tax return and / or income statement.
I do have several more years on the loan but plan on paying it off as early as I can.
I've taken out loans in the past and have never had to update tax returns to any of them so I'm curious as to why they would need it unless they plan on lowering my interest rate. I have had no missed payments, no late payments, and always pay more than the minimum. I am actually up on my payments.
Of course I will call them and ask this coming work week but I would like a more "authentic" outside view point from anyone who's experienced this and why.
Thanks. I'd appreciate any opinions, advise.
Read the original loan documents, there may be a section that you are required to update them with financials / tax returns.
If there is no such section, ask them what happens if you don't provide such documents.
If the section was included in the original loan docs, they may be able to call in the loan.
If the section was not included, it is not likely that anything will happen.
Thank you. I will call them tomorrow, Monday. I appreciate your advice. I will look over my paperwork tonight.
@Marina Loos it sounds like you have a "portfolio" loan or "commercial" style loan from a smaller bank. Most of the time these loans have 5 year "Renewal" clauses. Meaning, a loan that might be on a 20 year amortization that every 5 years will either have the interest rate adjusted or that they may not renew the loan and call it due. As suggested above review your loan docs...specifically the "Note" that will have the verbiage of this. And be prepared to find a different lender just in case. You should be able to find a 30 year fixed rate lender at this current time in the market. Keep us posted and feel free to ask anything else if you need. Thanks!