Loan Question: Transferring Single Family Home to LLC

Mortgage Brokers & Lenders
3yFollow

Loan Question: Transferring Single Family Home to LLC

Eliseo Luna
Member since 2023 · 3 posts · 0 votes

Hello All!

New to this game and this site! Looking forward to the ride. My question is that I'm moving from my current single family home to a new residential single family home. Planning to rent out Home #1, but would like to transfer the loan from my name into my LLC's name.

The question is in anyone's experience, does this create a brand-new loan or does the loan stay the same (Just the name on the loan changes)? The reason I'm asking is because I bought the house with 3.9% interest rate and was looking to try to keep the rate the same. Have not found much information on this. Would I pay for closing cost again?

0Reply
11 views

Most Popular Reply

Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3y

That is a tough one. Technically, the transfer of title would trigger the Due on Sale clause of the loan, but that might not get enforced by the servicer. It is a crap shoot, but technically they could call the loan if you deed it to anyone other than your name. That being said, I bought my home long before I met my wife and I added her to the deed. The mortgage holder didn't bat an eye. Fannie and Freddie do not allow you to hold the home in the name of an LLC, but only you can make that decision. Just transferring the deed does not create a new loan. If they were to call the loan, however, you would need to refinance it with a commercial style loan as Fannie/Freddie won't let the borrower be an entity. That, I would suspect, would be unlikely. The only way it's going to show up is when they get your updated Insurance Dec Page and Tax Bill.

1Reply
See this reply in the discussion

8 Replies

Jump to latestLatest
  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    3y

    That is a tough one. Technically, the transfer of title would trigger the Due on Sale clause of the loan, but that might not get enforced by the servicer. It is a crap shoot, but technically they could call the loan if you deed it to anyone other than your name. That being said, I bought my home long before I met my wife and I added her to the deed. The mortgage holder didn't bat an eye. Fannie and Freddie do not allow you to hold the home in the name of an LLC, but only you can make that decision. Just transferring the deed does not create a new loan. If they were to call the loan, however, you would need to refinance it with a commercial style loan as Fannie/Freddie won't let the borrower be an entity. That, I would suspect, would be unlikely. The only way it's going to show up is when they get your updated Insurance Dec Page and Tax Bill.

    1Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    3y

    these days it's hard to say - depends on the lender. Could be possible but you'd have to talk with current servicer

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
    WebsiteView Page
    0Reply
  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
    3y
    Quote from @Eliseo Luna:

    Hello All!

    New to this game and this site! Looking forward to the ride. My question is that I'm moving from my current single family home to a new residential single family home. Planning to rent out Home #1, but would like to transfer the loan from my name into my LLC's name.

    The question is in anyone's experience, does this create a brand-new loan or does the loan stay the same (Just the name on the loan changes)? The reason I'm asking is because I bought the house with 3.9% interest rate and was looking to try to keep the rate the same. Have not found much information on this. Would I pay for closing cost again?


     It is going to depend on your lender. You would need it in writing that you can do this without triggering the need to pay off the loan in full with a refinance (rates are much higher than 3.9% now!). Most likely, you will have to end up leaving it in your name but make sure you have the proper insurance since the situation is changing from a primary to an investment property.

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Eliseo Luna

    Ok post 1,700,002 on transferring to a LLC

    Question is why? If you want to throw money away I can give you my bank account and you can throw it in my bank account

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    3y

    Please don't take advice on something this important from a bunch of idiots on the internet- myself included. There is quite a bit of nuance to the answer to your question and it's something you should discuss with your attorney. Paying them $300 for an hour long consult so you can understand the pros and cons of different entity structures and figuring out what will work for you will be an excellent investment. 

    There's no "right" way to do this. Only varying levels of risk and reward. 

    Best of luck!

    0Reply
  • Eliseo Luna
    OP
    Member since 2023 · 3 posts · 0 votes
    3y

    Hey guys,

    I just want to take the time to say thank you for all your advice and taking time out your day to reply to my post. 

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    3y

    You'd likely have to create and refinance on your existing debt to have debt vested in an LLC, as opposed to you as an individual.

    0Reply
  • Becca F.
    Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
    3y
    Quote from @Corby Goade:

    Please don't take advice on something this important from a bunch of idiots on the internet- myself included. There is quite a bit of nuance to the answer to your question and it's something you should discuss with your attorney. Paying them $300 for an hour long consult so you can understand the pros and cons of different entity structures and figuring out what will work for you will be an excellent investment. 

    There's no "right" way to do this. Only varying levels of risk and reward. 

    Best of luck!


     This is the best answer I've seen. I'm also weighing the option to have my properties in LLCs set up in Wyoming (for anonymity) so I'll talk to an attorney. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free