Living Trusts

Created while you are alive, a revocable living trust lets you control the distribution of your estate. Ownership of your property and assets is transferred into the trust. You can serve as trustee or you can appoint another to serve as trustee. If you serve as trustee, you must appoint a successor to serve as trustee upon your death.

If your home is in a living trust and you want to either sell or refinance. The trustee must be available to help with the closing

Most lenders require you to take the home out of the trust prior to refinancing. You can then put the home back in the trust after the refinance has completed.

The primary advantage of having your home vested in a trust is that it avoids a legal process known as probate upon the death of one of the owners. It is true that most lenders will only lend to individuals on a residential mortgage loan, not to entities such as a trust. What normally happens in this circumstance is that the trustees grant deed the property to themselves to complete the loan transaction and then grant it back to the trust after the loan is recorded. The only risk for the homeowner in such a procedure is if one of the owners should happen to die during the brief period that the property is out of the trust. In that case, since the property would be vested in individual names it would have to go through probate proceedings.

Also another issue that might come up with some lenders when deeding the property back into an individuals name is the title seasoning. There are lenders who will over look this small challenge. Another nice benefit to having a property in a trust is the ability to transfer/assign beneficial interests without having to transfer title to the property.

Laws governing refinancing properties held in trust vary from state to state. Please speak wit your lawyer to get a full picture of how your living trust may affect your ability to refinance your home mortgage.

If you have any questions or concerns about your home in a living trust feel free to contact me. I can help you with more information.

» DISCLAIMER: The information contained in this article on 'Living Trusts' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.