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From what I understand, most banks can call your mortgage (terminate it) if you transfer to a LLC.
Thanks P1.
I opted to skip LLCs and get an umbrella insurance policy.. seems to be sufficient for my scenario.
If you get an LLC then I would echo what others have already said: Problem with getting before and buying In the LLC is it will probably be a higher interest rate.
If you transfer it into the LLC it could trigger a “due on sale” clause and call the mortgage due (however I have read for federally backed mortgages this clause does not exist, I.e. FHA, VA, etc.).. also I know many investors who have transferred and no issues came up with banks calling the notes due, I just personally wouldn’t take any risk especially if you have a low interest rate.
If go the LLC route you need to be intentional not to “pierce the corporate veil”, so have the LLCs own bank account and don’t mix personal/business expenses through it.. otherwise there is a chance the LLC doesn’t truly limit liability the way it is intended.
GT1 thankyou for the detailed response. Given the high interest rates, I am leaning towards Umbrella insurance.
Mentor
Prior makes it easier, but will the bank give you the same rate?
Not sure. Will check and keep this thread posted
Prior. The bank will make you hold title in a single purpose LLC and make the loan to that entity.