Best LLC Mortgage Lenders 2024: Top 5 Picks & Reviews
Reviewed by Randolph Vialva, MBA
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LLC (Limited Liability Company) mortgages are a type of mortgage that is taken out by a business to purchase a rental property or investment property. An LLC is a business structure that offers its LLC owners limited personal liability protection, which means that the owner’s assets are protected from any legal or financial liability related to the business. Like other LLCs, you don’t pay taxes directly by the business; the individual owners are responsible for paying the taxes.
Real estate investors or developers who want to hold their properties under an LLC rather than in their own names frequently use LLC mortgages. Also, this provides an added layer of protection for the investors’ assets, should any legal issues arise related to the rental property.
When applying for an LLC mortgage, the lender will evaluate the creditworthiness of the LLC rather than the personal credit of the individuals involved. The lender will also require the LLC to provide documentation such as financial statements and tax returns to assess its ability to repay the loan.
Overall, an LLC mortgage can be a useful tool for real estate investors looking to protect their personal assets and structure their investments in a way that makes sense for their business goals.
5 Best LLC Mortgage Lenders 2024
- Rocket Mortgage: Best Overall
- Lendio: Most Options
- Giniel Financial Group: Best Platform
- PNC Bank: Best Support
- Caliber Home Loans: Best Full-Service Option
What Is An LLC Mortgage?
Real estate investors use an LLC mortgage, a specific kind of loan, to buy rental properties while safeguarding the assets of a personal guarantor.
Top 5 Best LLC Mortgage Lenders April 2024
Rocket Mortgage
One of the key features of Rocket Mortgage is the ability to complete the entire mortgage process online, without needing to meet in person with a loan officer or visit a bank. This makes the process more convenient and accessible for borrowers, particularly those who prefer to conduct financial transactions online.
- Convenience
- Speed
- Variety of loan products
- No in-personal support
- Limited flexibility
- High fees
Rocket Mortgage is a digital platform launched by Quicken Loans in 2015 that allows consumers to apply for a mortgage and complete the entire process online. This mortgage lender offers an efficient application process that can be finished in a few minutes and offers real-time updates.
Rocket Mortgage uses advanced technology and automation to quickly verify financial information and credit scores, making it possible to approve small business loans in as little as eight minutes. The platform also provides personalized mortgage recommendations and allows borrowers to compare rates and terms from portfolio lenders and private lenders.
In addition to traditional mortgages, Rocket Mortgage offers a variety of loan products, including jumbo loans, FHA loans, VA loans, and refinancing options.
Lendio
One of the key features of Lendio is its marketplace approach, which allows borrowers to compare loan options from multiple lenders in one place. The platform also offers a personalized loan-matching algorithm that suggests loan products based on the borrower’s financial information and business goals.
- Range of products
- Streamlined platform
- Marketplace approach
- Not a direct mortgage lender
- Number of loan offers
- High-interest rates or fees
Lendio is a financial technology company that connects small business and LLC owners with lenders offering various loan options. Founded in 2011, Lendio provides a streamlined platform that simplifies the loan application process, allowing borrowers to quickly compare and select the best loan option for their needs.
The platform offers a wide range of loan products, including SBA loans, business lines of credit, term loans, invoice financing, and merchant cash advances. Lendio’s network includes over 300 lenders, ensuring that borrowers can find a loan that fits their unique business needs. Lendio’s platform is easy to use, and the application process is fast and straightforward, making it an attractive option for small business owners seeking financing.
Giniel Financial Group
One of the key features of Geniel Financial Group is its commitment to transparency and education. The company provides clients with regular updates on their financial status and offers educational resources to help them make informed decisions about their finances.
- Personalization
- Holistic tools and offerings
- Education Portal
- Limited coverage
- High fees
- Limited services
Geniel Financial Group is a mortgage lender and financial services company that specializes in providing customized financial solutions for individuals and businesses. Founded in 2017, Geniel Financial Group offers a range of services, including wealth management, retirement planning, risk management, and tax planning.
The company’s team of financial professionals works closely with clients to understand their financial goals and develop personalized strategies to help them achieve those goals. Geniel Financial Group takes a holistic approach to financial planning, considering all aspects of a client’s financial situation, including their income, assets, debts, and expenses.
Overall, Geniel Financial Group aims to provide comprehensive and personalized financial solutions that help clients achieve their long-term financial goals.
PNC Bank
One of the key features of PNC Bank is its commitment to innovation and customer experience. The bank has invested heavily in technology and offers a range of tools and resources to help customers manage their finances. PNC Bank also offers a range of rewards programs, including cashback and travel rewards, to incentivize customers to use their banking products and services.
- Large network
- Innovative technology
- Best rewards
- High fees
- Limited availability
- Limited customer service
PNC Bank is a mortgage lender and financial institution that offers a range of banking services to individuals and businesses. Founded in 1852, PNC Bank is headquartered in Pittsburgh, Pennsylvania, and has over 2,300 branches across 20 states.
PNC Bank offers a range of banking products and services, including checking and savings accounts, loans, credit cards, wealth management, and investment services. The bank also offers digital banking solutions, including mobile banking and online banking, to provide customers with easy access to their accounts and transactions.
Overall, PNC Bank is a trusted and reliable financial institution that offers a range of banking solutions to meet the needs of individuals and businesses.
Caliber Home Loans
One of the key features of Caliber Home Loans is its commitment to customer service. The company has won numerous awards for its customer service, including the J.D. Power Award for customer satisfaction. Caliber Home Loans also provides borrowers with access to a range of educational resources to help them make informed decisions about their mortgage.
- Range of products
- Digital application
- Customer service
- Higher rates or fees
- Limited physical locations
- Not transparent
Caliber Home Loans is a full-service mortgage lender that offers a range of mortgage products and services to borrowers across the United States. Founded in 2013 and headquartered in Irving, Texas, Caliber Home Loans has over 600 branches across the country and employs over 8,000 team members.
Caliber Home Loans offers a range of mortgage products, including conventional loans, government loans, jumbo loans, and refinancing options. The company also offers a digital mortgage application process, making it easy for borrowers to apply for a mortgage from the comfort of their home.
Overall, Caliber Home Loans is a reliable and reputable mortgage lender that offers a range of mortgage products and services to meet the needs of borrowers.
Pros & Cons Of Using An LLC For A Mortgage
Real estate business investors use LLC mortgages to safeguard their assets and add an extra layer of liability protection for their company. It allows investors to hold their rental properties under a business structure and evaluates the creditworthiness of the LLC rather than the individual.
Pros
There are several benefits to using an LLC mortgage for real estate investments. First, LLC mortgages provide an added layer of liability protection for real estate investor assets. By holding the rental property under an LLC, the business structure takes on any legal or financial liability related to the rental property. This protects the real estate investor’s assets from potential lawsuits or claims related to the investment property.
Second, LLC mortgages allow investors to structure their investments in a way that makes sense for their business goals. By using an LLC, investors can more easily manage multiple rental properties, and can more easily transfer ownership or sell the rental property. Additionally, an LLC mortgage can provide tax benefits, as the LLC can deduct expenses related to the rental property from its taxable income.
Finally, LLC mortgages allow investors to separate their personal credit from their business credit. When applying for an LLC mortgage, the lender will evaluate the creditworthiness of the LLC rather than the personal credit of the individuals involved. This can be particularly beneficial for investors with less-than-perfect personal credit, as the LLC’s creditworthiness can still qualify for a loan.
Cons
While LLC mortgages offer several benefits, there are also some potential drawbacks to consider. First, LLC mortgages can be more difficult to obtain than traditional mortgages, as lenders may require more documentation and underwriting to evaluate the creditworthiness of the LLC. This can result in higher fees or interest rates, which can add to the overall cost of the investment.
Second, LLC mortgages may require a larger down payment than traditional mortgages. Lenders may require a higher down payment to mitigate the risk of lending to a business rather than an individual, which can make it more difficult for investors to purchase properties.
Finally, LLC mortgages can be more complex to manage and administer than traditional mortgages. Investors will need to maintain accurate records and financial statements for the LLC and will need to ensure that they are meeting all legal and tax requirements for the business structure.
Which Documents Do Lenders Need To Finance A Mortgage Under An LLC?
There are six main documents conventional mortgage lenders, private lenders, and portfolio lenders will need to complete an LLC mortgage:
Articles of Incorporation
The state-filed articles of incorporation establish a corporation and specify its goals, organizational structure, and ownership.
Operating Agreement
An operating agreement is a legal document that outlines the ownership and operating procedures of an LLC.
Employee Identification Number
The IRS issues a unique nine-digit number called an EIN (Employer Identification Number) to identify a business entity for tax purposes.
Business Financial Information
Business financial information refers to the records and data that document a company’s financial performance, profit and loss statements, business checking account statements, and any other portfolio loans or private loans, including income statements, balance sheets, and cash flow statements.
Personal Financial Information
Personal financial information refers to an individual’s financial records and data, including income, expenses, assets, liabilities such as a separate portfolio loan or personal loan, and credit history.
Wrapping Up
There are tax advantages in addition to the legal liability of having a mortgage or multiple or one rental property. LLC mortgages are an effective tool for investors looking to protect their assets and structure their investments in a way that makes sense for their business goals and protects them against becoming personally liable for business payments. There are local community foundations and investors as well as portfolio lenders and local banks who can provide an LLC loan, offering the same legal protection as a traditional LLC.
To get a mortgage, investors must form an LLC, establish a business credit history, hold liability insurance, pay legal fees, may be asked for personal tax returns, and prepare financial statements and tax returns as well as other property ownership, personal expenses, and previous home loan experience. In addition, LLC borrowers are evaluated on the creditworthiness of the multi- or single-member LLC and may require a larger down payment and higher fees or interest rates. Also possible is a review of credit card accounts.
However, not being personally liable and potential tax benefits can make an LLC mortgage a worthwhile investment for many investors. The due-on-sale clause, also known as the acceleration clause, is a provision in a mortgage or deed of trust that gives the lender the right to demand full repayment of the outstanding loan balance if the property is sold or transferred to a new owner.
Frequently Asked Questions (FAQs)
LLCs may need mortgages to finance investments and provide an added layer of personal liability protection for assets. An investment property loan protects the limited liability companies’ assets when conducting real estate investing. LLC loans are different from a rental property mortgage; neither will require a personal guarantee. You cannot use the mortgage for all or part of the down payments, but because it is in the name of the LLC there is asset protection versus a more conventional mortgage in your personal name. LLC mortgages also provide pass-through taxation.
An investment rental property is part of your real estate portfolio is a real estate rental property purchased with the intention of earning a return on the investment, either through rental income, capital appreciation, or both.
The main difference between a business loan and an LLC mortgage loan is the purpose. A business loan can be used for any legitimate business purpose, while an LLC mortgage loan is specifically used to purchase or refinance a real estate rental property held under an LLC. Another difference is the collateral used to secure the loan. These may be secured or unsecured, while an LLC mortgage is typically secured by the rental property being purchased or refinanced. These business assets cannot be claimed as assets. Additionally, the evaluation process to get a mortgage may be different. A business loan is evaluated based on the creditworthiness of the business and its LLC owners, while an LLC mortgage evaluates the credit line of the LLC and the rental property being purchased or refinanced.
To keep personal and business assets separate, entrepreneurs should form a legal entity, such as an LLC, obtain a separate EIN, maintain separate bank accounts and financial records, and avoid commingling funds or assets.
While business credit is not always required for rental property financing, it can be helpful. Lenders may consider both personal and business credit when evaluating a loan application from rental property investors, and having strong credit as the business owner of an LLC rental property can improve your chances of getting approved. However, even if you do not have established business credit, you may be able to use your personal credit score, income, and the property’s potential rental income.
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