Guidance on refinancing from personal mortgage to an LLC

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Guidance on refinancing from personal mortgage to an LLC

Member since 2022 · 17 posts · 7 votes

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?

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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1y
Your best bet for a refi is DSCR. Conventional wont fly with an entity being the borrower or the beneficiary of the trust. Also, you'll want to dig into the LTV before getting too far along the path as most DSCRs are going to cap at 80% LTV. The trust may be a problem for a lot of lenders, but an LLC/entity will not.
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Brandon Croucier
Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
1y
Hey Charles, Yes!
A DSCR loan Rate & Term Refinance would be the best product for you.
A DSCR loan will not take into account any of your personal income & it wont even report on your personal credit report.
You can close in a trust or LLC, as long as the property has appreciated enough to cover the lower LTV you shouldn't need any cash to cover the remaining principal balance.
I am happy to connect & give you some more guidance should you need any!
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Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
1y
DSCR!
0 Reply
Andrew Zamboroski
Lender · Member since 2021 · 495 posts · 130 votes
1y
Quote from @Charles Wade:

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?
As others have said, a DSCR loan from a lender like myself could work. BiggerPockets is full of options for you to find someone that best suits your needs.

Cheers
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Joe Impagliazzo
Real Estate Lender · Newport, RI · Member since 2014 · 182 posts · 33 votes
1y
Charles you don't necessarily need a DSCR loan however you do need a Non-QM loan. If you want to avoid paperwork go DSCR. If your looking for the best rate, depending on the income you show there may be a product for you.
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AJ ExnerPro Member
Lender · Springfield, MO · Member since 2023 · 652 posts · 315 votes
1y
Quote from @Charles Wade:

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?
Hey Charles,
I would certainly lean DSCR as well, as mentioned above. The biggest factor that you need to take into consideration is that wherever you go for your refinance, that they are comfortable with two elements of your deal; the trust inside the LLC and the fact that it is a STR.
The land trust shouldn't be too big of an issue because it is owned by an LLC, but you definitely want to ensure ahead of time with the lender that they are okay with that kind of entity structure. The last thing you want to do is get an appraisal, move into final underwriting after weeks of work, only to get denied because of how things are structured.
Secondly, and almost more importantly, you want to make sure your lender is comfortable with it being a STR. The biggest part of a Debt-Service Credit Ratio mortgage is that they want to calculate the income of the property vs. the debt on the property incurred and there are a decent amount of lenders that are not comfortable underwriting the income of a property as a short-term rental. There are plenty that do, especially in showing a year of income production, but you want to absolutely make sure before you get in too far.
I'm happy to give some recommendations if you would like, shot a DM and would love to connect.
Good luck!
[email protected]417-427-2612
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Jesse R Wien
Lender · Arizona/Wisconsin · Member since 2022 · 17 posts · 3 votes
1y
So its not hard to refinance with an LLC. Fannie/Freddie even allows it now, but a DSCR loan is quite simple and easy. However, the numbers are really going to determine if that makes sense to do or not. I have a STR that is in an LLC, but the mortgage is still in my personal name. I was able to remove the PMI by requesting it and they did an ARV and removed it. I am a lender and happy to help and have also been through this myself, so feel free to call me and we can talk through and see what makes the most sense.
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- Tyler Carter
  Huntsville, AL · Member since 2017 · 14 posts · 10 votes
  1y
  Quote from @Jesse R Wien:
  
  So its not hard to refinance with an LLC. Fannie/Freddie even allows it now, but a DSCR loan is quite simple and easy. However, the numbers are really going to determine if that makes sense to do or not. I have a STR that is in an LLC, but the mortgage is still in my personal name. I was able to remove the PMI by requesting it and they did an ARV and removed it. I am a lender and happy to help and have also been through this myself, so feel free to call me and we can talk through and see what makes the most sense.
  
  Jesse, I am interested in how you have a mortgage in your personal name, but it is in a LLC. I didn't think that was possible. Thanks.
  0 Reply
- Charles Wade
  OP
  Member since 2022 · 17 posts · 7 votes
  1y
  Quote from @Tyler Carter:
  
  Quote from @Jesse R Wien:
  
  So its not hard to refinance with an LLC. Fannie/Freddie even allows it now, but a DSCR loan is quite simple and easy. However, the numbers are really going to determine if that makes sense to do or not. I have a STR that is in an LLC, but the mortgage is still in my personal name. I was able to remove the PMI by requesting it and they did an ARV and removed it. I am a lender and happy to help and have also been through this myself, so feel free to call me and we can talk through and see what makes the most sense.
  
  Jesse, I am interested in how you have a mortgage in your personal name, but it is in a LLC. I didn't think that was possible. Thanks.
  
  Hi Property was put into a Land Trust which is owned by the LLC
  
  Thanks
  0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
1y
Quote from @Charles Wade:

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?

What is your current LTV now? Additionally what is your current rate?
DSCR will be the easiest route. But you will also need to make sure it makes sense to refi since rates are slightly higher on these.
[email protected]818-269-7983
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Zach Edelman
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
1y
DSCR loan can achieve this all day. What do you think is the effective LTV of that loan today? If you got a 90% LTV loan when you acquired the property, most DSCR lenders will be at 80% LTV on a rate-term refinance, and thus you will likely have cash to close (not sure if you're OK with this).
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Charles Wade:

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?

you could get a DSCR loan, but recognize you would need to have 25% equity in the deal or more and you will still have to guarantee the loan - unless its a screaming lower interest rate you are getting, it may not be worth the expense to refinance.
7e investments53 Reviews
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Charles Wade
OP
Member since 2022 · 17 posts · 7 votes
1y
Quote from @Charles Wade:

Greetings and thank you in advance for the assistance and advise

I purchased my first STR using a conventional loan and in my name two years ago. The loan was 90% LTV with PMI. The property is now a STR for a year and it has already been transferred into a land trust owned by my LLC.

What I am looking to do now is to refinance the mortgage and remove the PMI as well as have the loan under the LLC and not me personally

1) Is this possible?
2) How?

3) Who?

Thank you to all for the great feedback and advise.

A few asked what my current rate is which it is 7.125% 30 year fixed
I think the property hasn't quite appreciated to 80% LTV as of yet. Close

My main objetive is to refinance the property to remove PMI at a rate that is either the same or below my current rate while under the LLC
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