Oct 08, 2010

Is it possible to refinance a house in a trust?

mortgage rates.jpgDear Liza: Interest rates on a thirty-year mortgage are at all time lows. I just got a great offer in the mail from my bank. My house is in our living trust. Can I still refinance? Sure. Here's what you do: go ahead and let the bank know you'd like the new loan. They will do a title search on the house and they'll discover that it's legally owned by your trust. (If they DON'T figure this out, you probably don't want to do business with them anyway, right?) If they care, and some lenders don't, they'll tell you to take the house out of the trust to do the new loan. Ask them if they'll do that--most of the time they're happy to do this because it's a simple thing to record a deed transferring the house from the trust back to you and your wife as individuals, and they want to sell the new loan. If they won't do it, ask the person who put the house into the trust in the first place (probably a lawyer) to take it out for you. Then, after you get the new loan, make sure to put the house back into the trust. This is just like what you had to do to get the house out of the trust: this time you'll record a deed transferring the house from you as individuals to you as trustees of the trust. Again, the lender will usually do this for you at the end of the transaction, but make sure to check to make sure that they follow through.  Re-fi's are the number one reason that I find houses NOT in trusts when they should be. It's easy to fix if the trustees are both alive; harder if not.