Lender advised he cant close under an LLC

[Jaran Ramsey]

I have a property up under contract In Cleveland, OhIo and my lender advised that he can’t close under the LLC and I probably would need a commercial loan? Is that true? Are commercial loans better than conventional loans? What other way can I get my property under an LLC?

[Kevin Romines]

If you want to do a loan in your LLC's name, the best loan would be a portfolio loan. These loans are designed to be in the name of the LLC however they require a personal guarantee from you on the deal, so you will also sign it personally. The rates are higher than Fannie Mae of Freddie Mac. but that's just the cost of doing business in that way?

If you take out a loan in your personal name (to get the best rates and fees) and plan to quit claim the deed after closing to your LLC, be aware that this can trigger the due on sale clause in the loans deed of trust. I say can, its up to the lender if they want to do anything about it? They don't always do something, but if they do, you could be forced to pay off the loan early to beat a foreclosure they would start on the property due to the transfer of title.

How do they find out about the transfer of title? Well your insurance on the property has to change to the name of the LLC to be properly insured. This notice gets sent to the lender and that's how they catch it. Depending on the state in which this is done, there may be excise taxes that would also have to be paid to do the transfer?

I'm not saying don't do it, I'm just saying, be aware of the potential issues if you choose to do it and be prepared to refinance or cash that loan out of they choose to accelerate the mortgage?