While approximately 50% of people over 55 years old do not have an estate plan in place, many people do. If you recently inherited a house, your loved one probably had an estate plan that listed you as the beneficiary of the home.
Now that you have this home, you might have questions about it. For example, you might wonder what happens if you inherit a house with a mortgage? If the home you inherited has a mortgage, you’ll need to learn your options.
Here are some of the possible scenarios to consider to help you understand your options for this home.
Keep the Home
Inheriting a house with a mortgage is a fairly common event. Some people have traditional mortgages on their homes when they die, while others have reverse mortgages.
Whenever you inherit a home with a mortgage, you must continue making the mortgage payments to prevent foreclosure. If you have money in the estate, you can use it to make the payments. If necessary, pay the monthly bills out of your pocket.
If you continue making the payments, you can keep the home and decide what to do with it. The first option you have is to keep the house for yourself. If you choose this option, you must get a mortgage loan in your name.
When you get a mortgage loan, your lender will pay off the existing loan that your loved one had on the house. Your new mortgage replaces the old one, and you get to keep the home.
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Rent Out the House
The second option you have is to rent out the house to a tenant. If you choose this option, you must still get a new mortgage in your name. When inheriting a house and keeping it, you must go through the legal work of transferring the home’s title.
Renting it out is a great way to make money from the property. Renting it is also a great way to keep the home without being fully responsible for the payments on it. Your tenant’s monthly rental payments should cover all the expenses.
Sell the Home
The third option you have is to sell the home. When selling an inherited house, you can hire a real estate agent to list it and find a buyer. You can also try selling the home yourself.
The fastest way to sell an inherited home is by finding a company that advertises, “we buy houses for cash.” These companies offer cash sales for homes, and they typically close on them within a couple of weeks.
What Happens if You Inherit a House with a Mortgage? Decide Which Option to Use
Do you now understand what happens if you inherit a house with a mortgage? You have three main options to use, and you might want to think about this decision for a while before deciding which option to use.
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