There are safeguards for those who inherit a property with a mortgage that enable them to take over mortgage payments according to the conditions of the original loan; however, home equity loans are not covered by these safeguards. Find out what to anticipate and what you can do if you have inherited or plan to inherit a home that has a home equity debt.
What Happens After Your Loved One Passes?
When someone passes away, their estate might go through probate. This means you’ll need to notify the lender and make payment arrangements to avoid defaulting on the loan. You can ask to assume the home equity loan, but the lender might say no and require immediate payment.
You have several options to deal with the home equity loan
- Pay it off using your own cash or take out a new home equity loan
- Assume the loan payments (if the lender allows it)
- Refinance the property to pay off the existing home equity loan
- Sell the property and use the proceeds to pay off the loan
- Buy out other heirs (if you’re inheriting the property with others)
How to Find Out if the Home I Inherited Carries a Home Equity Loan?
Check your loved one’s documents or run a title search on the property to see if there are any liens.
What Happens If Probate Takes a Long Time?
If probate takes a while, the executor of the estate will need to make arrangements with the lender to pause or defer payments. If no payments are made, the home equity loan will default, and the lender will foreclose on the property.
The Bottom Line
You have many options after inheriting a house with a home equity loan. Take your time, grieve, and seek professional help when deciding which option to take. Remember, it’s essential to keep the loan in good standing or pay it off to avoid foreclosure.
Conclusion
Inheriting a house with a home equity loan can be a complex and overwhelming situation. However, by understanding your options and seeking professional help, you can make informed decisions and find the best solution for your specific circumstances. Remember to take your time, grieve, and prioritize your financial well-being. Don’t hesitate to reach out to experts, such as attorneys or financial advisors, to guide you through the process. With the right support and knowledge, you can navigate this challenging situation and secure a brighter financial future.
FAQs
Can I assume a home equity loan on an inherited property?
The lender may allow you to assume the loan, but they might require immediate payment.
What happens if I can’t pay off the home equity loan?
The lender may foreclose on the property if you default on the loan.
Can I refinance the property to pay off the home equity loan?
Yes, refinancing is an option to consider.
How do I find out if the inherited property has a home equity loan?
Check the deceased person’s documents or run a title search on the property.
Can I sell the property to pay off the home equity loan?
Yes, selling the property is an option to pay off the loan.