Do You Need to "Season" a Retitled Loan??

Question

I own 3 properties outright in my LLC but am thinking of borrowing against one or more to make new purchases.  My bank says I need to pull the property(ies) out and retitle in my name but then I'll need to wait 6 months to "season" the title that's now in my name before I can borrow against it.  This seems nuts to me.  It's my property, owned in full.  If I'm the sole owner of the LLC, why would it need to be "seasoned"?  Anyone else have thoughts on this?

Alfred Litton · Answer

@Brian C.  I was actually even willing to change the title to my name on the owned property in order to get a loan against it.  This bank is saying, "Fine, but we have to wait 6 months after you do that to give you the loan in your name."  That seems really odd to me.  If I own the LLC, and therefore the home, why would a transfer of title to my name require a 6-month wait?  Weird.

Brian C. · Answer

Not sure if in your post you're saying if you're trying to keep the property owned by the LLC or get the title and loan transferred under your own name. If you're trying to keep the property in the name of an LLC, the bank may not lend to LLCs and is requiring you to transfer it to your own name.  There are plenty of banks that do lend to LLCs, so you can just look elsewhere.  If you're trying to get the house titled and loan in your name  (to get a better rate),  you do have to transfer it, but don't need the seasoning period.  I was worried about this as that is what I'm doing right now but the banks I've talked to do not require an additional seasoning period.

Upen Patel · Answer

Hey! @Alfred Litton Find a new lender. Seems like your bank has a internal overlay. Fannie/Freddie allow for transfer of title from LLC to personal name as part of the refi process. The title has to be seasoned in the LLC name, an has to be a like for like transfer. i.e. if the LLC is a 2 member LLC, then the title has to be in the name of those two members.

Eric Veronica · Answer

@Alfred Litton That may be the case for some lenders.  I personally do not require that 6 months if you were majority owner of the LLC.

Tarik Turner · Answer

You dont have to pull the titles from the LLC to refi them

Just not the case

Jaysen Medhurst · Answer

I'd start talking to some other banks, @Alfred Litton. Sure, they may want you to personally guarantee, but asking you to change title and then wait 6 months...

Have you considered HELOCs? There are a few big Credit Union that do them on investment properties (Pen Fed and Navy Fed both do them, I think). The rates will be a little higher, but a lot less hassle, lower fees, and don't pay interest until you actually start using the money.

If you use the HELOC to purchase and then refi into a conventional mortgage, that could be a good strategy.