When you are in the position that you’ve inherited a home with mortgage payments remaining – what should you do? One of the hardest decisions that anybody who is dealing with the loss of a family member who bequeathed you property must make is deciding whether to sell or keep the property in the family. The decision becomes even more complex when the property still has a mortgage payment that quite frankly you most likely can’t afford to pay.
So the question that many people who find themselves in this position must ask themselves is what options they have. Fortunately, this is a question that has multiple potential answers that can provide different solutions based on your specific situation. Here are a few ideas to consider if you’ve inherited a home with mortgage payments which are still due to a lender.
3 Options for Your Inherited Home with a Mortgage
Rent the Property: One rather easy solution is to consider listing the property as a rental while you consider what you should do with the property. When somebody has recently passed away, there are many things that need to be completed to ensure their estate is closed and assets are properly distributed. This responsibility often becomes one of the individual chosen to be the executor of the last will and testament of the deceased. And most likely by the time you’ve received notification that the property has been bequeathed to you; the financials have been clearly laid out.
By renting the property, you are able to receive income which can ensure the monthly mortgage is paid on time – while you try to create a plan to either pay off the mortgage or to sell the property and distribute profits of the sale to the estate. A great idea is to list the property for rent for the same amount that is due on the mortgage – no more, no less. Don’t try to make a financial profit here, just make sure that you have enough revenue coming in to pay for the mortgage and monthly expenses until you can come up with a long-term solution.
Sell the Property: Another solution to the situation of inherited a home with mortgage still remaining is to sell the property as soon as possible. This will allow you to pay off the mortgage remaining and keep the profits after paying taxes for inheritance if applicable in your situation. The drawback to this is that it can take some time to have the property listed, have a bid accepted, complete the closing procedures and then sell the house. If it this happens to you, the monthly mortgage is still due. And if you are listed as the owner of the property, this could negatively impact your credit and create a huge financial liability. If the balance of the inherited home is more than the home is valued at, short selling the home may be another option. The New York Times stated, that in some cases, negotiating with the lender for a short sale on the property may be the best solution.
Live in the Property: Another option available is to consider living in the inherited home with a mortgage. If you currently rent a property, there are many options which will allow you to take on the mortgage of the inherited property and leave your current rental property. You should check with your landlord of the rental property to see if there are any penalties that you’d need to pay if this were to be an option for you when you’ve inherited home with mortgage payments outstanding.
Big State Home Buyers can help you through the process of deciding what to do with your inherited home. Visit the Big State Home Buyers Service page for further details.