LLC first or Refi first?

[Tom Horan]

Hi Folks -

I own a single family home with 25% equity in it. Original loan was an owner occupied loan and looking to get the property out of my name and into an LLC. I also want to refinance the property. What makes the most sense - refi first or put into an LLC? Trying to keep in mind the due on sale possibility as well. Thanks for the advice.

[Jason Smith]

There are a million threads on LLC vs umbrella insurance vs both. And what level of protection LLC actually provides you.

If you do LLC first you will greatly reduce the number of places that write you a loan. The places that will give you a much worse rate. You are already going to be paying an approximately 0.50% penalty for it being an investment property. If you do LLC afterward some people say the loan could be called in, it is mortgage fraud, etc. Some people say those people are being paranoid, no one's loan is ever called in. My suggestion no LLC, refinance, buy an umbrella policy.