I did alot of searching and couldnt find an answer to this exact situation.
I currently own a townhouse in Florida as my primary residence. I am in the process now of getting a HELOC. Soon I plan to turn the house into a rental. I am also planning to transfer ownership of the house to an LLC. What happens to the HELOC when I transfer to the LLC? Can I also transfer the HELOC?
I have read that I can get a HELOC on the property when it is turned into a rental, but the rates are as favorable, and would likely be harder to get when owned by an LLC. So I would like to get the HELOC now so I can get the prefered rates and LTV.
Thanks, appreciate the feedback!
You’d have to call the lender and ask.
When the bank will discover it they may either freeze your line of credit or worse invoke the due on sale clause and request immediate payment of any outstanding balance.
The freezing of a HELOC is unfortunately very easy for the bank to do for any reason, like if you loose your job or change risk profile. And historically, some banks are known to do it often. So, while a HELOC is a good source of cash for your investment, if you want to commit to a deal, get the cash out of the HELOC early loosing a little bit of interest payment, instead of risking loosing much more when you discover on closing day that you can't use it.