Can I Do a Refi if My House Is in My Living Trust—Yes!

Can I Do a Refi if My House Is in My Living Trust—Yes!

Many people want to take advantage of low interest rates and refinance property that they moved into their Living Trusts, so we get a lot of inquiries about whether this is possible—and the answer is yes!

For a Revocable Living Trusts to be effective, it needs to be funded—which means you must transfer your assets from you to your Trust. As part of this process, you physically change the titles of your assets from your individual name or joint names, if you’re married, to the name of your Trust. This includes any property you may own.

The property’s owner is now your Trust—not you

When you apply for your new loan—and a refi is just another loan, happily, at a lower interest rate–the bank will do a title search and will find that the legal owner of the property is now not you, but your Trust. While many small service-oriented banks will allow you to borrow through the medium of your Trust, the large banks often will not. Those banks will ask you to take the property out of the Living Trust in order to refinance it—with you as the owner. Once you transfer it back into the Trust, the Trust will be the owner once again. 

A Trust Transfer Deed will transfer the property

If you do indeed need to remove the property from your Trust, you will need two deeds: one to take the property out of the Living Trust and another to move the property back into the Trust. A Trust Transfer Deed is a special grant, or quitclaim deed, that transfers an owner’s interest in real property to his/her Living Trust.

Do you need help moving your property into your Living Trust?

With the popularity of refi’s these days, the Trust Transfer Deed is a legal document we frequently help our clients prepare and file. Talk to us at California Document Preparers