The elevated rate of inflation in the United States has resulted in a consistent rise in home mortgage rates, rising from approximately 3% in July 2020 to 7% in July 2023. While there are a variety of reasons to refinance a mortgage, many buyers anticipate doing so when mortgage rates eventually fall below the current rates. This post is for you if you’re thinking about refinancing your home that is titled under a trust. Some homeowners whose property is held in trust are hesitant to refinance because they don’t know how to go about it or whether it’s even feasible. Sometimes, it’s the other way around. Even though homeowners wish to avoid probate, they may be discouraged from placing their homes in a trust due to refinancing concerns.
The issue of refinancing a house, or any personal property, held in a trust is a simple one. Refinancing issues shouldn’t keep you from putting your home in a trust. In addition, the benefits of putting property in a trust often outweigh any mortgage refinancing difficulties. This post will help you understand the process of refinancing a house that is held in trust.
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Options for Refinancing a House in a Trust
When you apply to refinance a home held in trust, banks or lenders present you with two options, based on our experience at Rilus Law:
What Type of Trust is Your House Titled in?
A trust is a very common estate planning strategy that serves many purposes. One great way to pass along property without having to pay gift taxes on deed transfers is to hold a house or any other property under a trust. Properties held in trust also provide better asset control, protection for your beneficiaries, and prevention of probate. Below are the ways a house can be held in a trust.
How to Refinance Property in a Trust
FAQ
Can I do a reverse mortgage if my home is in a trust?
Can I transfer my mortgage to a trust?
How does a trust affect a mortgage?
Can a home with a mortgage be put in an irrevocable trust?
Can I refinance a mortgage held in a trust?
However, refinancing a mortgage held in a trust involves specific steps which may occur outside of the refinancing transaction. It’s important to ensure it’s done correctly so there’s no lapse in your homeowner’s title insurance coverage. Why would I want to refinance property in a trust?
Can a trustee refinance a home?
As the trustee, you can refinance the home if the trust document anticipates the need. With mortgage interest rates currently very low, you might want to look into your refinancing options. Yet the mortgage on a trust property can make things somewhat more complex for a trustee who hopes to refinance a house with a more desirable loan.
Can I refinance my home with an irrevocable trust?
Yes. An irrevocable trust restricts you from selling or financing the property value while you are alive. But a revocable trust is more flexible. As the trustee, you can refinance the home if the trust document anticipates the need. With mortgage interest rates currently very low, you might want to look into your refinancing options.
Can you refinance a living trust?
A living trust is a revocable trust. And a revocable trust is a trust you can change — which means you can refinance. That said, your lender must be on board. Let’s take a brief look at how this plays out. Say you want to pass your home along to a specified person after you die.