First mistake - name on contract
I thought after listening to countless BP webinars and podcasts I wouldn't make any stupid mistakes. But I did, and it was right from the beginning. On the buyer name on the contract I used an LLC. Little did I know, conventional mortgages, such as a 30 year fixed from a big bank, will not lend into an LLC. Duh! How could I miss that?!? Rookie mistake!
My original contract had to be voided and redo the contract with the right name. Fortunately, this was not such a big issue. However, had I lost the deal because the seller would have changed his mind, I would have been upset.
Moral of the story is to check with your lender whether they'll lend directly to an LLC. If not, you may need to think about your financing if you are seeking to own your property in LLC.
Fortunately, I didn't lose this deal and things are progressing!
What rookie mistakes could have cost you the deal but didn't?
Comments (4)
@Matt Ashton I had actually seen a question about this on a BP forum after I had already entered into the contract, but I also didn't think anything of it. Apparently, in order to be considered an FHA loan, you can't use an LLC.
@Kevin Fox I definitely agree, because of this mistake the deal could have fallen through for sure.
@Patrick Liska I wasn't able to obtain a conventional loan with LLC ownership. I got lucky in the sense that the seller was still willing to go through on the deal.
Tzvi Ausubel, over 8 years ago
surprised you were able to change a conventional loan to an LLC ownership. usually if they are loaning to an LLC. its in the form of a Commercial loan.
Patrick Liska, almost 9 years ago
Definitely important to note that banks will generally not loan to an LLC. As far as mistakes during your first transaction go, though; I think it's fairly safe to say you could have done worse. MUCH worse.
Glad you were able to sort through the problem. We all make mistakes. It's your ability to find an equitable solution for these mistakes that can really set you apart.
Kevin Fox, almost 9 years ago
Interesting! I am still learning and I hadn't thought of that question before nor have I heard it in the financing podcasts I've listened to so far. Thanks for sharing!
Matt Ashton, almost 9 years ago