Can you refinance a property with a conventional loan if its in an LLC?

[Mohammed Milord]

Let's say you bought a property using a hard money lender, and you put the property in an LLC. Is it possible to than refinance the hard money loan through a conventional bank if the property is in an LLC?

[Andrew Postell]

@Mohammed Milord hmm, so the answer here is "yes, but.."

So, you can still get a conventional loan but the loan will require you to transfer the property to your personal name at closing. The loan is in your personal name with conventional lending and the property is in your personal name at closing. You can switch the property to your LLC name after closing...but the mortgage will always be in your personal name.

And just to be clear, there are 2 main types of loans for investors: “Conventional” and “Portfolio”

Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans...they have more rules...but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.  Play by those rules, get better terms on the loan here.  One of the rules here is that the loan and property need to be in your name.

Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually with a prepayment penalty. Here there is no such thing as a "Debt to Income" ratio...because your income doesn't matter.  More Flexibility but worse terms on the mortgage.

I hope all of that makes sense but feel free to reach out with any other questions.  Thanks!