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Thursday 28 August 2025 14:39:29 GMT
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A lot of real estate gurus tell people, “Just put your property in an LLC.” But be careful… because doing that the wrong way can create major problems with your mortgage and your protection as a homeowner. Here’s what most people don’t realize👇 Many traditional loan programs do NOT allow you to transfer a property into an LLC after closing. This is especially true for conventional, FHA, VA, and many non-QM loans. One of the only loan types that commonly allows LLC ownership is a DSCR loan designed specifically for investment properties. So what’s the risk? When you transfer a property into an LLC without lender approval, you could trigger the “due-on-sale clause,” which gives the lender the right to call the loan due. Does that always happen? No. But it absolutely can happen, especially if the loan is discovered during insurance changes, title updates, or refinancing. Another huge mistake people make: Putting their PRIMARY residence into an LLC. In many states, when you do that, you can lose homestead protections. Homestead exemptions can help protect equity in your primary residence from certain creditors and lawsuits up to specific limits allowed by state law. Once your home is owned by an LLC instead of you personally, those protections may disappear. For most homeowners, a better conversation may be: ✅ Proper insurance coverage   ✅ A living trust for estate planning   ✅ Umbrella liability insurance   ✅ Talking with an attorney and CPA before transferring title An umbrella policy is something more homeowners should look into. It adds extra liability protection above your home and auto insurance and can help protect you financially from lawsuits, accidents, slips and falls, and other major claims. LLCs can absolutely make sense for some investment properties — especially when structured correctly and when the lender allows it — but don’t blindly follow internet advice without understanding the risks. Every situation is different. Talk to your lender, CPA, attorney, and insurance agent before moving title around. Hopefully this helped you avoid an expensive mistake. Follow @whatsamortgage for more mortgage and real estate tips.
A lot of real estate gurus tell people, “Just put your property in an LLC.” But be careful… because doing that the wrong way can create major problems with your mortgage and your protection as a homeowner. Here’s what most people don’t realize👇 Many traditional loan programs do NOT allow you to transfer a property into an LLC after closing. This is especially true for conventional, FHA, VA, and many non-QM loans. One of the only loan types that commonly allows LLC ownership is a DSCR loan designed specifically for investment properties. So what’s the risk? When you transfer a property into an LLC without lender approval, you could trigger the “due-on-sale clause,” which gives the lender the right to call the loan due. Does that always happen? No. But it absolutely can happen, especially if the loan is discovered during insurance changes, title updates, or refinancing. Another huge mistake people make: Putting their PRIMARY residence into an LLC. In many states, when you do that, you can lose homestead protections. Homestead exemptions can help protect equity in your primary residence from certain creditors and lawsuits up to specific limits allowed by state law. Once your home is owned by an LLC instead of you personally, those protections may disappear. For most homeowners, a better conversation may be: ✅ Proper insurance coverage ✅ A living trust for estate planning ✅ Umbrella liability insurance ✅ Talking with an attorney and CPA before transferring title An umbrella policy is something more homeowners should look into. It adds extra liability protection above your home and auto insurance and can help protect you financially from lawsuits, accidents, slips and falls, and other major claims. LLCs can absolutely make sense for some investment properties — especially when structured correctly and when the lender allows it — but don’t blindly follow internet advice without understanding the risks. Every situation is different. Talk to your lender, CPA, attorney, and insurance agent before moving title around. Hopefully this helped you avoid an expensive mistake. Follow @whatsamortgage for more mortgage and real estate tips.

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