When a loved one passes away, they don’t just leave behind a home- they leave behind a mortgage too. The hardest decision to make when you’ve inherited a property with a mortgage that hasn’t been paid off yet is whether or not to sell. Grief is hard enough, but it becomes even harder when deciding whether or not to take on the mortgage.
What options are available? Here are some options to consider if you’ve inherited a house with an unpaid mortgage.
Rent the Property
When someone 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 falls on the individual chosen to be the executor of the last will and testament.
By renting the property, you are able to receive income which can ensure the monthly mortgage is paid on time. This gives you space to create a plan to either pay off the mortgage or 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
The most obvious choice is to simply sell the property right away. This will allow you to pay off the mortage, pay off all taxes, and keep any profit you may have left over. The only 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 this takes any longer than a few months, and 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 house’s mortgage is more than the house is valued at, negotiating with the lender for a short sale of the property may be the best solution.
Keep The House
Selling is the easiest route, but staying can be the sweetest. One might make more money by selling, that’s true. Renting is also a great choice. But for many, the home they inherit is the home they grew up in, and it hurts to give it up. There’s something to be said for waking up each day in the house where you took your first steps. Where the bus picked you up for the first day of school. Where you spilled grape juice all over the white carpet and made your brother swear not to tell mom. Whatever it is, it’s important because it’s important to you. And more Americans than ever are deciding that money isn’t everything, and they want to live in a home that tells their story, that they want their children to live in the home of their grandparents. There’s something to be said for that.
Don’t Go It Alone
No matter what you decide, asking for help can’t hurt. Ask someone you trust for advice, and if you can afford it it may be a good idea to hire legal counsel. Big State Home Buyers is here for you if you need help deciding what to do with your inherited housewith a mortgage. We’ll tell you your best option, whether that means working with us or not.