Loan Question: Transferring Single Family Home to LLC

[Eliseo Luna]

Hello All!

New to this game and this site! Looking forward to the ride. My question is that I'm moving from my current single family home to a new residential single family home. Planning to rent out Home #1, but would like to transfer the loan from my name into my LLC's name.

The question is in anyone's experience, does this create a brand-new loan or does the loan stay the same (Just the name on the loan changes)? The reason I'm asking is because I bought the house with 3.9% interest rate and was looking to try to keep the rate the same. Have not found much information on this. Would I pay for closing cost again?

[Doug Smith]

That is a tough one. Technically, the transfer of title would trigger the Due on Sale clause of the loan, but that might not get enforced by the servicer. It is a crap shoot, but technically they could call the loan if you deed it to anyone other than your name. That being said, I bought my home long before I met my wife and I added her to the deed. The mortgage holder didn't bat an eye. Fannie and Freddie do not allow you to hold the home in the name of an LLC, but only you can make that decision. Just transferring the deed does not create a new loan. If they were to call the loan, however, you would need to refinance it with a commercial style loan as Fannie/Freddie won't let the borrower be an entity. That, I would suspect, would be unlikely. The only way it's going to show up is when they get your updated Insurance Dec Page and Tax Bill.