Yes, you can close in the name of your entity with a non-traditional or Non-QM loan or a Commercial loan.
With non-traditional loan products such as Non-QM loans and DSCR loans you can close your loan in your entity name as well as forgo traditional income requirements.
The downside with Commercial and Non-QM loans in comparison to traditional Conventional loans are the terms, specifically with
- Interest Rates
- Loan Costs
- Repayable Loan Periods
- Pre-Payment Penalties
Commercial loans tend to have adjustable (ARM) interest rates that adjust every 5 years and are repayable over 15 – 25 years versus Conventional loans that offer fixed interest rates for the duration of the loan and are repayable up to 30 years, allowing investors lower monthly payments and higher monthly cash flow without the need of refinancing their loan every 5 years, as is the case with Commercial loans.
Although Commercial loans tend to have slightly higher costs than traditional Conventional loans they are a great alternative option to Conventional loans and a great loan product for real estate investors.
Commercial loans tend to not have Pre-Payment Penalties.
Non-QM DSCR loans offer 30 year and in some cases 40 year fixed interest rate loans and Interest Only loans that do not have to be renewed and/or refinanced as Commercial loans do.
The downside is Non-QM loans tend to come with hefty Pre-Payment Penalties, often up to five years and their interest rates tend to be higher than both Conventional and Commercial loans.
So, if you ever want to refinance to either lower your rate and/or cash out, you might be stuck with your original higher interest rate or paying the Pre-Payment Penalties. Not to mention should your plans change and you decide to sell it during your Pre-Payment Penalty period. All this said another way, avoid Pre-Payment Penalties if possible.
Another option many real estate investors chose is close a traditional Conventional loan in their personal name and then (typically 3 plus months after closing) transfer title to their LLC, entity and/or Trust. You will want to consult with your Loan Officer and/or mortgage lender prior to executing this strategy as there are a few rules and guidelines that must be followed and when they are, you receive the best of both worlds,
- Best of the best loan terms and
- An added layer of asset protection
