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Company Loan Type APR Est. Pmt.

Seeking Lender - not sure residential or commercial

Posted on: 29th Jan, 2007 09:58 am
I'm looking to find a lender for a 2 unit residential building in Missouri. I want to put the building's title in an LLC. Self employed so no docs. 676 credit score. Have gaurantor with doc income and 770 credit score. Gaurantor could be part of LLC (would this help?) Would this be considered a commercial or conventional mortgage? thanks
It will be considered commercial mortgage if the property is used for business purpose. And since it is a 2 unit building it falls under the category of residential property. As per definition a residential property can be up to four units building.

Let me also tell you that if the other person having doc income and better credit score can be a co-borrower along with you then rates offered by lenders will be better.

Linda Claudia
Posted on: 29th Jan, 2007 10:22 am
Yes I also agree, if the other person with the 770 score be a co-borrower then the rates will be much better than if you get the loan in your own name.
Posted on: 29th Jan, 2007 10:41 am
Thanks for the reply. Even though I won't be living there and the property is an investment and will be rented out, would I be correct to say the property is considered residential while the mortgage is commercial?
In order for the mortgage to be residential, would I have to live there?

Yes they could be a co borrower.
Since the deed or title will be in an LLC's name, does it matter how the LLC is structured? Can it be only in my name, or does the co borrower need to be a partner of the LLC?
thanks
Posted on: 29th Jan, 2007 10:41 am
"Even though I won't be living there and the property is an investment and will be rented out, would I be correct to say the property is considered residential while the mortgage is commercial?"
For investment property what you will be getting will be a commercial mortgage. There can not be a residential property with a commercial mortgage on it. The type of mortgage depends on the property.
Posted on: 29th Jan, 2007 11:01 am
If you form the LLC as you only the sole member and under your tax payer identification then the property transfer into the LLC will not have any tax consequences.

I am not sure if the co-borrower is required to be a partner of the LLC or not but as he will be on the property title the lender may require him to be part of the LLC also. But you should discuss this point with the lender to know for sure if it will be required or not.
Posted on: 29th Jan, 2007 11:47 am
gregsvault,

You have dual questions going here.

1) can you purchase a 2 unit investment property with a residential loan or commercial loan? - ANSWER - Because the property is a 1-4 unit it would be eligible for a residential real estate loan even with your intent of having both units rented.

2) Can the loan be granted directly to the LLC? ANSWER - Yes & No. A business entity cannot takeout a conventional real estate loan and loans given to business entities are considered commercial loans. The loan would be commerical not because of the collateral but because of the borrower.

If you decide to pursue this purchase as an individual ownership then you or your guarantor or both could buy the home using a residential and conventional mortgage.

If you decide to pursue this purchase as a business entity, then the business is the borrower. There are no "no doc" commercial loans. this may solve that dilemma for you right away. If you decide to do it this way, you would have to add the guarantor to the business for them to be considered in the transaction. the business is the borrower.

good luck
Posted on: 30th Jan, 2007 10:56 pm
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