Disclaimer: Consumer legal fundings and advances are not loans under applicable financing laws. Rockpoint’s products are non-recourse, meaning if you don’t win your case, you don’t have to pay us back. Receiving financial support in connection with a legal case is typically (and oftentimes incorrectly) referred to as a “lawsuit loan” or “loan.” Therefore, for the ease of search references, these terms may be used in this context to refer to our funding products, but we maintain our separateness from consumer loan products in all legal aspects.
Wondering, “Can I get a home equity loan on an inherited property?” You sure can! If your relative left a house equally to multiple heirs, but you’d like to buy them out and move in, a home equity loan may be the answer.
If you’re thinking about a home equity loan for your inherited home, check out our advice below. And if you’re interested in a cash advance on your inheritance, learn more about Rockpoint Probate Funding here.
Inheriting a Home With an Existing Mortgage: Your Refinancing Options
So you’ve inherited a home with a mortgage from your relative; now what? One option is loan assumption, for which you’ll transfer the loan to your name and assume mortgage payments. By doing this, you’ll have the same mortgage payment and terms the deceased did.
However, this isn’t feasible for everyone. The mortgage payments may be too expensive for you to afford, or maybe the deceased had poor loan terms.
You could pay off the loan out of pocket if your savings allow, but you might be better off applying for a home equity loan or HELOC. This loan allows you to borrow against the home’s equity. It’s commonly used to buy out other heirs. You can also use it to pay off the remaining mortgage if it’s small.
Cash-Out Refinance vs. Home Equity Loan for Inherited Debt
Home equity loans and cash-out refinances may seem similar, but there are a few key differences. A cash-out refinance will replace the existing mortgage with a new one, allowing you to keep a portion of the equity.
A home equity loan allows you to borrow against the property’s equity for a lump-sum payment as well. However, it doesn’t replace the mortgage. Rather, it gives you a second mortgage in addition to the original one.
How To Use a Home Equity Loan To Buy Out Heirs
“Can I get a home equity loan on an inherited property?” Yes, and here’s how you can use your loan to buy out other heirs.
- Request a property appraisal to determine the current market value of the home, which will help you estimate how much you need to borrow.
- If you’re planning to sell after buying out heirs, look over the due-on-sale clause. Many mortgages have this clause, which requires you to pay off the remaining loan balance on transferred mortgages. However, this clause doesn’t apply if you’ve inherited the house from a relative.
- Apply for your home equity loan. The approval process is fairly speedy and usually takes just a few days. After that, it can take five to seven days for the lender to transfer funds into the estate bank account. You can then use the funds to buy out other heirs.
What If You Inherit a Property With an Existing Home Equity Loan?
Suppose you’ve inherited a home from your parents with an existing home equity loan. This situation is a bit more complex than simply inheriting the home free and clear. Here are your options.
Assume the Home Equity Loan Payments
The lender may allow you to take over the payments for the existing home equity loan, but you can typically only do this if the deceased was your relative. Talk to the lender to find out what’s required to assume the deceased’s loan payments.
Refinance
Refinancing allows you to pay off the existing home equity loan and then put the new mortgage in your name.
Sell the Home
If you’d rather not live in the home and don’t want to own it, selling is a valid option. By selling, you can use the proceeds to pay off the home equity loan.
Apply for a New Home Equity Loan
Instead of refinancing, you might opt to apply for a new home equity loan. This can be ideal if interest rates are high. Applying for a new loan will allow you to keep the existing interest rate on the mortgage, which may be lower than current rates.
What To Consider When Making Decisions About Inherited Property
In addition to “Can I get a home equity loan on an inherited property?” here are some other questions to review.
Are You Just an Heir or the Estate Executor?
If you’re merely an heir, you’ll have to consult with other heirs regarding what to do with the property. If you’re the executor, you have the final say regarding what happens to the property.
How Much Debt Is There on the Mortgage?
If there’s a lot of debt remaining on the mortgage, consider whether it makes financial sense for you to keep the property.
Is the Property in Good Condition?
If the property has seen better days, are you financially able to make the needed repairs? What about maintenance and landscaping?
Does the Property Have a Reverse Mortgage?
A reverse mortgage is a type of mortgage that allows borrowers to give up equity in a property in exchange for monthly payments. Reverse mortgages are popular with older borrowers who’ve reached retirement age. However, they can spell trouble because homes that have reverse mortgages are often upside-down.
Need an Advance on Your Inheritance? Call Rockpoint Probate Funding
Still wondering, “Can I get a home equity loan on an inherited property?” Want to learn how a beneficiary and an heir differ? Rockpoint Probate Funding has the answers. We also offer cash advances on your inheritance, allowing you to bypass the lengthy waiting period that comes with the probate process.
If you’re ready to apply for an inheritance advance, call us at (888) 263-8588.
