I'm very new to investing and wanted to find out info about if and how I can transfer my existing property (of which I still have about 90% left to pay on the mortgage) to an LLC.
I'm pretty sure I will have to pay closing costs but not sure how it works with the remaining mortgage. I'm pretty sure my bank won't allow me to transfer the balance of the mortgage under the same terms to the LLC, so is it possible? Or even just point me to the best person (i.e. lawyer, accountant, etc) to get this info from.
Thanks! (This is my first post so please be nice)
Conventional loans are typically not assumable and the lender has more than likely (like 99% likely) put an alienation clause (due on sale) in your contract which will allow them to call the loan due if you sell the property or transfer title. The odds of them finding out and activating the clause varies as many people here on BP have their own experiences with such a clause, so beware that such an outcome is a possibility.
When making such a transfer, which you would do via a quit claim deed, the payments will remain the same and the loan will still be in your name.
There are no closing costs associated with transferring title as there is no new loan being created. The rate and terms of the original loan will remain in place.
Bob, thanks so much for responding. Let me make sure I understandso I can roll the dice and do a quit claim, hoping that the bank doesn't call on the loan to be due. And in that scenario, since I wouldn't be transferring the mortgage to another lender, I'd be paying no closing costs? Is my only other option in transfering title to an LLC just paying off the loan?
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.