How to Decide What to Do with an Inherited House
By Johnathon Case
If you’ve recently inherited a house, there are certain details that you need to consider. You need to think about the expenses that it brings, such as mortgage payments. Instead of dealing with these expenses, you may find it easier to sell the inherited property for cash.
You May Inherit Added Responsibilities
When you inherit a house, you inherit everything that comes with it. This may include a mortgage.
An inherited house with mortgage brings more responsibilities. You may now have two separate mortgages to pay — your own mortgage and the mortgage on the inherited property.
Besides the mortgage, you also take on any other expenses related to the property. You may need to pay property insurance, utilities, and taxes. You also need to deal with upkeep such as taking care of the yard.
These expenses and any outstanding mortgage become your responsibility. However, there are a few options for handling these expenses, including:
- Renting the property
- Living in the property
- Selling the property
The first two options require you to assume the responsibilities discussed. You still need to ensure that any existing mortgage is paid and that the taxes and insurance are covered.
If you decide to rent the property, you need to deal with the hassles of becoming a landlord. These hassles include dealing with repairs, cleaning out the property, and finding tenants. You then need to collect rent each month and deal with tenant complaints.
Living in the property may be a viable option if you can afford the mortgage. However, you may need to sell your existing property while completing the moving process.
Selling the inherited property helps you avoid these challenges. When selling the property, you can try to sell it yourself, work with a realtor, or sell it for cash.
Attempting to sell the property on your own is difficult as you don’t have the same resources used by realtors to attract potential buyers. If you work with a realtor, you’ll need to pay fees upon closing.
Whether you sell it yourself or work with a realtor, you also need to pay closing costs and wait for the closing date. Home sellers often wait two to three months for this date to arrive.
At Sell My Old House, we can buy your property and you get cash quickly. With our help, you may sell the property in two weeks or less and get back to your life.
Inheriting a Property with a Mortgage
Receiving an inherited house with mortgage includes extra complications. Most people don’t know how the probate process works or what to do with their inherited mortgages.
You need to understand that you assume the responsibilities of the previous mortgage holder. Depending on the financial situation of the deceased, you may also inherit debts.
The lender has the right to foreclose on a property if you fail to make the mortgage payments. Even after inheriting the property, the consequences of foreclosure still affect you.
As the mortgage is now in your name, the foreclosure negatively impacts your credit. With the foreclosure on your credit history, you may struggle to get approved for loans or find it harder to search for jobs.
You may also owe money after allowing the foreclosure to proceed. After selling the house at auction, the sale price may not cover the mortgage balance. The remaining balance is yours to pay.
Another potential issue of inheriting a house with a mortgage is the “due on sale” clause. Some mortgages include this clause, which protects the lender if the title holder decides to transfer ownership to another individual.
When you inherited the property, the deceased owner technically transferred ownership to you as the beneficiary. The due-on-sale clause may require you to sell the property or pay off the mortgage. You typically have 30 days to deal with the accelerated loan.
If the deceased had a reverse mortgage, the reverse mortgage is now yours. These types of mortgages are popular with older individuals who have built up a lot of equity.
With the reverse mortgage, the owner receives a cash payment from his or her equity. This establishes a new loan that needs to be paid when the owner moves out of the property. The lender typically gives you six months to pay back the reverse mortgage.
We can help with an inherited property that has a mortgage. We regularly work with individuals facing these same issues. Instead of dealing with a reverse mortgage or costly mortgage payments, you can sell us the property, get your cash, and get out of the mortgage.
Inheriting a Property with No Mortgage
An inherited house with no mortgage may seem to be a windfall. You now have a property with no mortgage payments to make. It is all equity.
As discussed, inheriting any property brings added responsibilities. While you may not have a mortgage to pay, you still need to pay property taxes, insurance, utilities, and other household expenses.
Depending on the location of the property and its current value, the property taxes and insurance may exceed your current rent or mortgage. You may still end up paying more than you currently pay even without a mortgage on the inherited house.
You also need to consider whether the inherited house is livable. If the deceased owner was unable to keep up on household maintenance, the home may need renovations before you can move in.
Becoming a landlord or selling the house on the open market are also options. Renting a property is often more work than people realize. You still have a second home that you need to maintain and tenants that you need to deal with.
Selling the house on the open market isn’t always convenient, especially if the property is in a different city or state.
At Sell My Old House, we can take the property in its current condition. You can also avoid the inconvenience of selling a house on the open market. We just need to assess the house before giving you an offer the same day.
Selling an Inherited House Jointly Owned with Siblings
If you have siblings, your deceased relative or parent may leave the house to you and your siblings. An inherited house with sibling co-owners changes the situation.
Instead of having sole authority of what you want to do with the home, you need to consult with your siblings. You may want to sell the property while one of your siblings wants to live in it or rent it out.
Unless the deceased specified otherwise, you and your siblings will own equal portions of the property. For example, if it’s just you and one other sibling, you’ll each own 50% of the property.
The best option is to come to an arrangement with your siblings. If you can’t decide what to do with the property, it’s possible to file suit for partition.
With this lawsuit, you petition a judge to order the sale of the property. However, the process is complicated and may not go in your favor. It may also destroy your relationships with your siblings.
By selling the property, everyone can move on and avoid any future disputes. It’s in the best interest of all parties to simply sell the home quickly.
Benefits of Selling Your Inherited House for Fast Cash
Selling the inherited property is often the preferred choice as it allows you to avoid the issues discussed. You don’t need to deal with realtors, wishy-washy buyers, or the expenses of owning a second home.
Selling your house for fast cash may also help you get tax breaks. While tax laws frequently change, most home sales require the seller to pay the capital gains tax. When you sell an inherited property, you are only taxed based on the increase in value since you received the property.
Choosing to sell a home to a cash buyer also eliminates realtor fees, closing costs, and the potential for the sale to fall through.
You may also need to sell the inherited home quickly if the mortgage includes a due-on-sale clause. The due-on-sale clause accelerates the loan, requiring the new owner to pay off the mortgage or sell the property.
In most cases, you’ll receive a notice letting you know that you have 30 days to pay off the loan. That is not enough time to sell a property through traditional methods.
With a fast sale to a cash buyer, you can typically get your money within a couple of weeks. This allows you to satisfy the due-on-sale clause and get out of any other responsibilities that come with the inherited property.
If you’ve recently inherited a home, you may not have a lot of time to decide what you want to do, especially if the home still has a mortgage.
Inheriting a house can be a complicated situation. If you were close to the deceased, you may also have strong emotions connected to the property. Selling the home may give you closure while also helping you avoid added expenses and challenges.