Pay more to close the loan under LLC or Change the title after the loan closes?

Question

If I close the loan under my personal instead of LLC, I pay less points $~1200. My lender said I can change the title after the loan closes. I am sure there is a cost to change the title after the loan closes + paper work. Is it worth the headache? What do you think?

Allan C. · Answer

why do this?  You likely don't have the net worth, proper LLC management or proper separation of personal interests to make this an effective approach.

there numerous BP threads you can search to get more insights.

tldr - keep under personal name and get a good umbrella plan.

Clint Coons · Answer

Before transferring real estate into an LLC, it’s essential to consider the following:

1. Transfer Fees or Property Tax Reassessment

Some states impose a transfer tax or reset the property tax basis when property ownership is moved into an LLC. To avoid these costs, a common strategy is to set up a land trust to hold the property title. Land trusts, in most cases (except in Pennsylvania), are exempt from transfer taxes and reassessments. The process involves deeding the property to a land trust and then assigning the beneficial interest of the trust to an LLC for asset protection purposes.

2. Due-on-Sale Clause

If transfer taxes are not a concern, the next consideration is the due-on-sale clause, which could lead to loan acceleration. Fortunately, if your mortgage is backed by Freddie Mac or Fannie Mae, transferring an investment property into an LLC will not trigger acceleration. In 2017, Freddie and Fannie updated their guidelines to allow such transfers. To check if your loan is owned by either entity, use their loan lookup tools:

• Fannie Mae Loan Lookup Tool
• Freddie Mac Loan Lookup Tool3. Loans Not Owned by Freddie or Fannie  If your loan is held by a private lender or another institution, it’s important to evaluate the interest rate. For pre-2022 loans with lower interest rates, direct transfer to an LLC could risk triggering acceleration and result in refinancing at a higher rate. In such cases, using the land trust-to-LLC strategy can mitigate this risk.  For newer loans with higher or comparable interest rates, the decision largely depends on personal preference—whether to transfer directly into an LLC or use the land trust strategy.  Final Thoughts  In my 27 years of practice, I’ve encountered fewer than 20 cases of loan acceleration, and most involved creative financing or FHA loans.

3. Loans Not Owned by Freddie or Fannie

If your loan is held by a private lender or another institution, it’s important to evaluate the interest rate. For pre-2022 loans with lower interest rates, direct transfer to an LLC could risk triggering acceleration and result in refinancing at a higher rate. In such cases, using the land trust-to-LLC strategy can mitigate this risk.

For newer loans with higher or comparable interest rates, the decision largely depends on personal preference—whether to transfer directly into an LLC or use the land trust strategy.

Final Thoughts

In my 27 years of practice, I’ve encountered fewer than 20 cases of loan acceleration, and most involved creative financing or FHA loans.

Matthew Becker · Answer

for sure close in your name and switch to LLC.  It is very common and banks are fine with it.  There is no reason to pay a higher rate for a llc loan

Stuart Udis · Answer

Depending on the property location you may be responsible to pay transfer taxes based on the properties assessed value. In addition you will be paying deed prep and recording fees. You are most likely going to spend more on transactional costs than the savings + are at risk of due on sale clause being triggered (ultimately will be up to the lenders discretion). If you are going to purchase real estate in an LLC or any entity for that matter, I recommend titling the real estate correctly from day one. However I also recommend anyone purchasing real estate in an LLC being able to articulate precisely why they are buying their real state in that entity with a full understanding of the benefits. Most investors are unable and most spend unnecessarily on entity creation and asset protection at the direction of alarmist asset protection firms for the incorrect reasons.

Ashish Acharya · Answer

@Jorge Liang Closing the loan under your personal name saves about $1,200 in lender points, but transferring the title to an LLC later comes with costs and risks. Title transfer fees range from $500–$2,000, and some states impose transfer taxes, though exemptions may apply. A key risk is the due-on-sale clause, allowing the lender to demand full repayment, though enforcement varies.

Keeping the property in an LLC provides liability protection, shielding personal assets from lawsuits. Financing through a personal loan usually offers better rates and lower costs, but using an LLC builds business credit for future investments. Tax-wise, rental income flows through to your personal return in either case, but transferring the title later could affect depreciation schedules and property tax assessments. If upfront savings matter, closing personally and transferring later may work, but if long-term protection and simplicity are priorities, paying for an LLC loan upfront is worth considering. Consulting a real estate attorney and CPA ensures compliance and tax efficiency.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Tom S. · Answer

@Jorge Liang  I believe in CA the LLC fee is $800 annually, so factor that in too.

Katie Balatbat · Answer

@Jorge Liang

The process to actually record a deed into the LLC after closing is generally fairly straightforward, but if you need to get an attorney involved, it may eat up those savings. You'll also want to confirm that the transfer is being done in a manner that does not adversely affect you for property taxes. Additionally, most mortgages have due-on-transfer clauses that could be triggered if you transfer ownership after closing.  You may want to investigate these matters closely.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.

Rick Albert · Answer

Actually, some lenders have a problem with switching it over to an LLC. The loan was personally guaranteed by you, not a corporation. The lender may call the loan and want you to pay the remaining balance. There is actually real risk here. From what I hear it is low, but still there.

Keep in mind your loan will likely get sold, so you need to do more due diligence other than what a loan officer is telling you. I would consult an attorney who specializes in this.

Also, assuming the property is in California, if it wasn't subject to CA Rent Control, once it goes into the LLC, it might be. That was one of the caveats with AB 1482.

Caleb Brown · Answer

In my area it's pretty easy and cheap to switch it over to the LLC. Typically they can do it while the client is there closing.

Pay more to close the loan under LLC or Change the title after the loan closes?

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