Loan Assumption Strategy
Hello, everyone: I was told about a loan assumption strategy but was wondering if anyone has ever done this before, and if so, how did you transfer the property from you individually to an LLC?
#1 All Forums Contributor
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- Virginia
@Sarah Stapp
Almost impossible to assume a loan today unless it's a VA loan - best alternative is a subject 2 deal.
Also zero reason to transfer to LLC.
Get copy of promissory note. Unless is from olden times, or a VA and you are a veteran, is not assumable. Note likely says it's due on sale. When you change the title into a LLC that's a sale.
Hopefully you did not pay for this "strategy."
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Owner finance and subto are better strategies. No one wants the debt in their name.
Quote from @Eliott Elias:
Owner finance and subto are better strategies. No one wants the debt in their name.
I second this! If you can go with seller finance/owner carry that would be the way to go!
All FHA and VA loans that are still outstanding today are assumable, but only by owner occupants. I'm not aware of loans that are assumable by non-owner occupants. For those you'd need to structure something like what others have mentioned above, with the unlikely but present risk of the lender calling it due.
@Alex Fenske Do you know if you can assume an FHA loan and owner occupy, if you already have an FHA?
Quote from @Michael Bridgett:
@Alex Fenske Do you know if you can assume an FHA loan and owner occupy, if you already have an FHA?
Great question and I actually do not know the answer! I know that with VA loans, the assuming borrower does not use their benefit as they don't even need to be a veteran. I'd suggest finding whatever letters/guides have been issued by HUD itself to see if you can find an answer on that, and if you do, please let us know.
Quote from @Michael Bridgett:
@Alex Fenske Do you know if you can assume an FHA loan and owner occupy, if you already have an FHA?
You're allowed to have more than one FHA loan at a time. As long as the servicing provider approves the assumption, that should be no issue. Of course there must be legitimate reasons as to why you're needing another FHA loan (relocating to a new city, upgrading or downgrading due to family situation..etc).
Got it. Thanks @Darnell Lockett. I just wasnt sure if those same FHA guidelines apply for an assumption as well.
You're welcome @Michael Bridgett.