Posted on: 11th Dec, 2007 07:36 pm
We want to set up a FLP or FLLC as part of our estate planning, as we have 2 properties that are vacation rentals & our son would like to keep these (rather than sell after we are gone). When the mortgage holder of one of the properties was queried about a title change that would result when we would move the properties into the FLP, they responded that the mortgage will have to be refinanced. We have a great mortgage, only 11 years left, with 5.2% interest and hate to lose this & be forced to pay much higher interest rate. Are there any other options available to us other than a refi or don't do FLP?
Hi Guest,
Welcome to the forums.
You should only refinance the mortgage if you can get a rate lower than 5.2% currently but I'm not sure as to whether you'll get such a mortgage. For that, you need to talk to some lenders and ask about their rates of interest and charges on the loan. What I mean to say is, if at all you are refinancing, do it for your benefit and not just pay more than you have been doing so far.
Regarding the estate planning, FLP is no doubt a very good option. It helps protect your assets while retaining the right to have control over them. But since your lender doesn't agree to it without a refinance, you have no other choice here. Even if you transfer the property using a life estate, I think the lender might object because what he is bothered about is the change in the title, though in a life estate the ownership rights are passed on to heirs only after the grantor or you (in this case) would die.
Take Care
Welcome to the forums.
You should only refinance the mortgage if you can get a rate lower than 5.2% currently but I'm not sure as to whether you'll get such a mortgage. For that, you need to talk to some lenders and ask about their rates of interest and charges on the loan. What I mean to say is, if at all you are refinancing, do it for your benefit and not just pay more than you have been doing so far.
Regarding the estate planning, FLP is no doubt a very good option. It helps protect your assets while retaining the right to have control over them. But since your lender doesn't agree to it without a refinance, you have no other choice here. Even if you transfer the property using a life estate, I think the lender might object because what he is bothered about is the change in the title, though in a life estate the ownership rights are passed on to heirs only after the grantor or you (in this case) would die.
Take Care