Ask The Money Coach

Q: Will Forming an LLC For Real Estate Investing Help Me Get a Mortgage Loan In The Company’s Name Instead of the Individuals?
A: Although loan guidelines and bank policies can vary greatly among lenders, in general, most mortgage lenders in the United States make very little distinction in evaluating applicants seeking a mortgage as individuals versus those who are trying to get a loan in the name of a Limited Liability Company (LLC). In fact, major banks usually will analyze and underwrite a loan the same way: taking into consideration the credit rating, income and assets of all members of the LLC – just like they would look at all the financial information and qualifications of a single individual or two co-signers (perhaps a husband and wife) applying for a mortgage.

LLC Benefits: Tax Advantages and Asset Protection

The bottom line, therefore, is that while an LLC may offer tax benefits and potential asset protection for real estate investors, simply forming an LLC is not likely to help you to better qualify for a mortgage. Even under that LLC structure, banks will pull the TransUnion, Equifax and/or Experian credit files for all LLC members, and will likely require each of you to serve as individual guarantors on the loan.

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