Is your home in a revocable living trust? Are you worried that it may prevent lenders from issuing a home equity loan? It’s a common concern among seniors who use trusts as part of estate planning.
Will a lender refuse the loan? The short answer is yes, some lenders do refuse to make home equity loans on trust-owned property. However, this refusal reflects lender policy, not a legal requirement. No law prohibits a bank from lending on a home owned by your revocable living trust.
Under Florida law, a revocable living trust does not change who owns the property for borrowing purposes. If you created the trust, serve as trustee, and remain a beneficiary, the law treats you as the owner.
Because of this, many banks and credit unions routinely make loans secured by trust-owned homes. When a lender refuses, the problem usually lies with the lender, not with your trust.
Why Some Lenders Avoid Trust-Owned Property
Banks that refuse to lend on trust-owned homes usually do so for internal reasons. These reasons rarely involve legal risk.
Common reasons include:
- Their staff is unfamiliar with trust ownership
- They use loan documents that do not accommodate trust ownership
- Their underwriting software automatically flags trust ownership
- They prefer to avoid additional document review
When a lender refuses, it is almost always because it is easier for them, not because your trust creates a legal problem.
Your Revocable Trust Does Not Prevent Borrowing
A revocable living trust does not prevent you from borrowing against your home. You also don’t need to dismantle the trust to qualify for financing.
Because you retain control over the trust assets, you keep the power to buy, sell, and mortgage the property. Florida law recognizes this authority. Many lenders understand this and lend without hesitation.
If one lender refuses, that refusal does not mean another lender will respond the same way. Lending policies vary widely, even within the same region.
You Have Options If a Lender Refuses
If a lender hesitates or refuses to make a home equity loan, you usually have several practical choices.
The first option is to look for a lender that is trust-friendly. Many local banks, credit unions, and portfolio lenders regularly lend on trust-owned homes. These institutions often have experience reviewing trust documents and know what to request.
Another option is to provide a trust certification. Many lenders will proceed once they have it. A trust certification is a short document confirming that the trust is revocable and that you have borrowing authority.
As a last resort, you could consider a temporary deed out of the trust. Some lenders may require the home to be deeded to the individual before closing. The deed then transfers back to the trust afterward.
The temporary deed transfer is a safe option, but you must have legal guidance. A small mistake c
ould result in unintended tax, homestead, or title issues.
Common Questions About Revocable Trusts and Home Equity Loans
Can a bank legally refuse a home equity loan because my home is in a revocable trust?
A bank can refuse the loan. The important point is that no law requires it to refuse lending against a home in a revocable trust. That means you have options.
Does a revocable living trust change who owns the home for lending purposes?
No. When you create, control, and benefit from the trust, the law treats you as the property owner.
Are some lenders more willing to lend on trust-owned property than others?
Yes. Many local banks, credit unions, and portfolio lenders regularly approve loans secured by trust-owned homes.
What is a trust certification, and why do lenders ask for it?
A trust certification summarizes key trust terms and confirms your authority without requiring disclosure of the entire trust.
Will deeding my home out of the trust affect my Florida homestead protections?
It might. That is why it is important to work with an attorney. They can review the transfer carefully to avoid unintended tax or homestead consequences.
Do I need to dissolve my trust to qualify for a home equity loan?
No. You do not need to dissolve your revocable living trust to get a home equity loan. The home is still legally your property for lending purposes.
Should I speak with an attorney before agreeing to a lender’s trust requirements?
Yes. Legal review helps protect your estate plan and prevents avoidable problems with title, taxes, or exemptions.
Get Access to the Lending You Need
Your revocable living trust does not prevent you from borrowing. If a lender refuses to work with trust ownership, that refusal reflects the lender’s preference, not a legal rule. Another lender may issue approval without hesitation.
The Scott Law Offices are here to help seniors and their families navigate these issues. We can help you review lender requests, identify trust-friendly banks, provide certification, and coordinate a temporary deed. Contact our team today!
