FLORIDA LLC INVESTOR MORTGAGE LENDERS
Closing in the name of a Florida LLC is not allowed by Fannie Mae or Freddie Mac for conventional Florida mortgages. For the last 4-5 years, essentially all conventional Florida mortgage loans must meet Fannie Mae or Freddie Mac guidelines. Prior to that, Alt-A loans were available. Very few banks today are willing to do a portfolio loan.
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In general different Florida banks and other Florida mortgage lenders have different guidelines about FloridaLLC loans and other Florida business entities going onto the title of the house. A Florida LLC or Trust is allowed by most banks whereas other forms of organizations such as corporations, s-corps, and non-profits are slightly less welcome by Florida mortgage lenders in general.
The good news is that it is not very much harder to get a loan for an Florida LLC than it is to get a loan as if you were each going on the loan as individuals. In fact, at most Florida mortgage lenders it’s identical. Keep in mind that some Florida mortgage lenders don’t even do them, but the one’s that do will have a process that’s similar to most Florida mortgage lenders including:
In most cases the credit, income, and assets of all members of the LLC will be used to qualify for a Florida mortgage using an LLC. The loan will be underwritten just as if you and your friend are buying a house together as individuals. Depending on the Florida mortgage lenders that funds the loan you will either show up as an individual on the loan, or simply as a guarantor. As an individual it will be on your credit, and as a guarantor is USUALLY isn’t (keep in mind, different Florida mortgage lenders have different credit bureau reporting guidelines, you should check with each individual Florida mortgage lenders.
So depending on what your goal is, the Florida LLC may or may not make sense. You can accomplish the same goal financing it as an individual. If you’re goal is simply the most favorable Florida mortgage terms, buying a property in a Florida LLC will not help you get better terms then purchasing in your own name. If you have tax related goals or other goals, it’s best to check with an Florida mortgage lenders to find out what LLC loan options are available based on your credit and down payment to purchase.
Sometimes Florida mortgage lenders will allow an LLC to use credit that has already been established. Usually this doesn’t apply here as it seems your Florida LLC is not yet formed. At any rate, if an Florida LLC, Corporation, and has credit and assets of it’s own, some Florida mortgage lenders will take that into account when rating your loan.
Remember that when you purchase in a Florida LLC will be treated as a “ non-owner occupied mortgage loan,” unless you can supply valid documentation that all members of the Florida LLC have lived together in the past and are going to continue to live together in the future. Again, you’re just as well off to do it as individuals in that case. At any rate, Florida mortgage lenders consider non-owner occupied mortgage loan transactions to be more risky (because they are in general), and so all but one investor requires a down payment, and the interest rates are higher.
To summarize, forming an Florida LLC for mortgage purposes will only benefit you inasmuch as it has the potential to keep a ton of properties off your personal credit report IF you can find a Florida mortgage lender that doesn’t report the loan on your personal credit. Other than that, any benefits would be legal or tax related. In that case, you should also ask your attorney or accountant about the comparative benefits of trusts, corporations, and LLPs.
WHAT IS A FLORIDA LLC?
Florida limited liability companies alsl know as an LLC in Florida form of a private limited company. It is a Florida business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is not a corporation; it is a legal form of a Florida company that provides limited liability to its owners in many jurisdictions. Florida LLCs do not need to be organized for profit. In Florida businesses that provide professional services requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but may be required to form a very similar entity called a professional Florida limited liability company.