Archive for Friday, December 22, 2006

Refinancing a home that’s in a trust

December 22, 2006


Q: We created a basic living trust last year and placed our home and other property into it. Now we would like to refinance our mortgage because interest rates have dropped. Will we have a problem refinancing because title to the home is now held in our trust's name instead of our individual names?

A: Many homeowners create an inexpensive trust to hold title to their property because the trust permits their estate to be distributed to heirs without passing through the costly and time-consuming probate process.

Refinancing a home or other property held in a trust is usually easy. However, a relatively small group of lenders will not permit a living trustee (such as you or your living spouse) to sign all of the required refinancing documents.

If your particular bank is among this handful of financial institutions, you probably can solve the problem by briefly transferring title to the home out of the trust and back to you, signing all the required loan documents, and then moving the title back into the trust.

It's a simple three-step process that shouldn't add any extra time to the expected closing date of your refinancing schedule.


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