Refinancing A Home In A Revocable Trust? Our Bethesda Estate Lawyers Explain Part 2

Smart homeowners across America are creating effective estate plans that account for a wide range of scenarios, most of which will involve the property. As such, it’s vital to take the proper steps when working through estate law and its many complexities. Placing your property in a revocable living trust, for example, can give you the power to manage your estate up until your death. While this can prove very beneficial, those hoping to refinance their homes may run into complications. If you’re looking for experienced guidance through this process, our professional estate planning attorneys in Bethesda are here and ready to help. JDKatz is proud to be a law firm specializing in numerous fields, from FBAR filings to criminal litigation services. Our counsel relies on a range of experienced experts to provide insight and guidance in all aspects of law. We’re as interested in your success as you are, and our legal team is ready to assist in any way we can.

Last time, we left our blog series on a bit of a negative note, explaining a mortgage lender’s hesitation to loan a lot of money to a revocable trust as opposed to an individual. Today, our estate planning experts will conclude this topic by looking at the best ways to ensure an optimal outcome for you and your property. If you’re in need of an estate lawyer in Maryland, the JDKatz team is here and ready to help.

How to Make Everything Work

Your best approach when navigating the complex world of estate law is to refer to the Federal National Mortgage Association (FNMA), commonly referred to as Fannie Mae. The FNMA has laid out rules and guidelines for homeowners looking to refinance their trust property. Your revocable trust will normally be acceptable if it was created during your lifetime, you were one of the primary beneficiaries of the trust, and the rules allow you to finance with a lender for the property. Every situation is different, so be sure to work with an expert when structuring your living trust. Lenders will often offer different support options based on the type of property you are refinancing.

Personal Residences

As we have stated before, your lender will either provide conditions for a loan or deny your trust outright. If the lender approves your loan after meeting these requirements, go ahead and proceed with the refinance. One strategy for property owners who live on the property as their primary residence is to simple take their property out of the trust. This is known as re-titling, and can be summarized as:

  1. Signing the property back into your personal ownership
  2. Refinancing the property with your name on the loan
  3. Returning the property back into the trust with a deed transfer

When refinancing through this process, it’s important to know that the title company will often take care of re-titling your property.

Secondary Properties

The same two outcomes apply to refinances for rental or vacation homes, as your lender can either accept the conditions or deny them. Remember, though, that lenders who work with investment companies and private LLCs are experienced in creating solutions for entities as opposed to individuals. This is important, as many of the rights afforded to for your personal property and revocable may not hold up with secondary properties. Property investors of all types need to be informed to avoid costly setbacks. Our Bethesda estate planning attorneys are here and ready to help if you need assistance!

Additional Warranties

Similar to private mortgage insurance, other warranties may be required when you are refinancing your trust property. This is not done to be punitive, moreover, lenders are looking to protect their investments to remain profitable for employees, clients, and investors. In many cases, it can prove entirely helpful to reach out to an estate planning attorney or real-estate expert for assistance. JDKatz, for example, will work with your lender to create the best outcome for your property. Our estate lawyers can write assurances and provide documentation that your trust and its assets can be used as collateral against this impending loan. While we can’t guarantee that this will suffice, using a legal expert to vouch for your estate plan can help a lot.

Planning for the succession of your estate to both provide continuity of your assets and care for loved ones can be complex, relying on a range of approaches to create a cohesive plan that will hold up once you pass on. It’s important to seek out professional help when you are not sure, as minor errors now can have major ramifications in the future. JDKatz is proud to be your trusted team of estate lawyers in Maryland, delivering comprehensive support and a personalized approach for your unique needs. Our dedication to quality in all of our services helps to create better outcomes for everyone involved. Contact us today to learn more!