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# How does the Integrated Disclosure Purpose option do?

The option selected for the Integrated Disclosure Purpose prints as the PURPOSE on the Loan Estimate and Closing Disclosure.

The PURPOSE indicates the consumer’s intended use of the loan and includes four mutually-exclusive options: Purchase, Refinance, Construction and Home Equity Loan. Because only one purpose may be indicated for a transaction, the regulation requires you to select an option based on the 'hierarchy', or the order of the available options listed in Regulation Z. [See 12 C.F.R. 1026.37(a)(9) and Commentary]

To determine the Integrated Disclosure Purpose for a transaction, evaluate the first option (Purchase), then the second (Refinance), followed by the third (Construction), and finally the fourth (Home Equity Loan). For example, the Integrated Disclosure Purpose is 'Refinance' if the transaction meets the criteria for this option and does not meet the criteria for a 'Purchase.' Similarly, the Integrated Disclosure Purpose is 'Home Equity Loan' only if the transaction does not meet the criteria for the first three options.

Refer to Regulation Z requirements for guidance in determining the Integrated Disclosure Purpose. The definitions are summarized as follows:

- Purchase means that the consumer intends to use the proceeds to purchase the property securing the transaction.
- Refinance means that the credit is not for a purchase and will be used to satisfy and replace an existing obligation (from the same or a different lender) that is secured by the property that also secures the new transaction.
- Construction means that the credit is not for a purchase or a refinance, and the credit will be used to finance the initial construction of a dwelling on the property securing the transaction (this includes construction only or construction with permanent financing, but does not include a renovation or improvement).
- Home Equity Loan means that the credit is not for a purchase, refinance, or construction (this includes first or subordinate liens).

The Integrated Disclosure Purpose will also affect the values used in the Calculating Cash to Close table for Down Payment/Funds from Borrower, Funds for Borrower, Seller Credits and Deposit.

- If Purchase is selected, + Seller or Seller Information Unknown should be selected in collateral details.
- If Refinance, Construction, or Home Equity is selected and you want seller disclosures, Use Seller Disclosures on Non-Seller Transaction should be selected. Selecting + Seller or Seller Information Unknown may result in inaccurate values in the Calculating Cash to Close table for Down Payment/Funds from Borrower, Funds for Borrower, Seller Credits and Deposit.

If the Construction is selected in the Integrated Disclosure Purpose list, an option must be selected in the Construction Note Type list. Documentation for construction loans are supported for in-house, new transactions. It is not supported for refinance or secondary market transactions.