Can a LLC Get A Mortgage?
A LLC, believe it or not, can be the vesting for a residential mortgage (including a primary residence, vacation home, and rental property)!
You may have called several mortgage lenders asking if you can take title to the property in your LLC and been told that is not allowed. I am here to tell you that vesting in a LLC is allowed!
There are mortgage lenders that will allow vesting (another term for taking title) in a LLC. These lenders will most likely be keeping these mortgage loans in their portfolio. Fannie Mae, Freddie Mac, and other buyers of mortgage loans typically won’t buy a mortgage with title vested in a LLC.
What does it mean to you if a mortgage lender keeps a mortgage in their portfolio? The interest rate will usually be higher than a rate they offer on a mortgage that they can sell to an investor.
If you are prepared to pay a higher interest rate to take title in your LLC, the next step is to provide the documentation the lender will ask for about the LLC.
Here is a list of what most lenders will ask for you to provide:
- Your filed Articles of Incorporation/Certificate of Formation, including all amendments (or equivalent documents required by the state to register a LLC)
- Certificate of Good Standing (or equivalent document) issued from the state in which the LLC is organized. The certificate can be dated no more than 90 days prior to closing
- Signed Operating Agreement, including all amendments, attachments, and schedules, if any. The Operating Agreement must provide the term of the LLC and have a stated purpose that will allow ownership of property, the right to borrow, and the right to mortgage property.
- Resolution of Unanimous Consent of the Member(s) of the LLC. The resolution must specifically identify the property, approving the mortgaging of said property and the execution of documents to effect said mortgage. The resolution must also designate a member who shall execute all documents on behalf of the LLC and include a witnessed incumbency signature section (designated member provides a sample of his/her signature)
- A complete Member List showing all Members and their respective ownership interests
- If the property is located in a state other than the state in which the LLC is organized, the following documents issued from the state in which the property is located shall also be provided: A filed Certificate of Authority (or equivalent document) showing the LLC is properly registered in that state; if the LLC’s ownership includes a non-natural person, documents concerning that entity may also be required to be submitted for review; An attorney opinion letter could be requested if the complexity of the situation warrants
A member of the LLC will have to personally guarantee the mortgage. Therefore, normal qualifying documents will have to be provided.
Now you know the effect of vesting in your LLC has on the interest rate you will be quoted and the documents required. Are you ready to go forward?
Phil Caulfield NMLS #386911 APMC #1850 has been helping people obtain mortgages since 1985. "The views, articles, postings, and information listed at this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation."