Inheriting a home can feel like a major windfall, but also comes with potential red tape. There are taxes to consider, and then there’s the matter of inheriting a home with a remaining mortgage balance. Receiving a home with a standing mortgage shouldn’t be cause for concern. Here are three things you could do if you’ve inherited a home that isn’t paid off.
Sell the home
Selling a home you have inherited is a simple way to tie up loose ends and eliminate the remaining balance on the mortgage. You can also keep any remaining funds left after the sale of the home as your inheritance. In most cases, choosing to sell an inherited home means hiring a realtor, so be aware of any associated costs that come with these transactions. Otherwise, selling is your simplest path toward moving on from the unwanted cost of an inherited mortgage.
Pay the balance
Maybe you’d like to keep the home you have inherited as a primary residence or rental property. Whatever the case, paying off the remainder of the mortgage in one lump sum will give you full ownership of the home. This may be an attractive option if the balance on the mortgage is low, or if you’d like to hold onto the property to sell at a later date. Real estate can be a great investment, so paying a relatively small sum for a property now could pay off in the long run.
Take over the mortgage
This option is more complicated than the previous two, but in many cases, it is possible to take over the mortgage payments on a home you have inherited. Actually, the process of taking over a mortgage is simpler than acquiring your own home loan in many ways. No application is required for inheritors who take over an existing mortgage, and there’s no need to go through the usual loan process. Just be sure you can afford the monthly expenses associated with owning the property before agreeing to take over a mortgage.
Which option should you choose?
When it comes to your inheritance, no decision should be made lightly. It is important to weigh all options before choosing to part ways with a home or make it your own. First, consider the home’s appraised value and the remaining balance of the mortgage. It may be useful to work with an appraiser. Next, calculate the monthly expenses associated with keeping the home to be sure they are within your budget. Consider things like necessary repairs, replacing appliances or HVAC components, the amount of property taxes, and the cost of utilities for the property.
If you decide you’d like to keep an inherited home but the terms of the mortgage are unfavorable due to high interest rates or other conditions, refinancing could be an option. Trust the mortgage experts at First Ohio Home Finance to guide you through the refinancing process with care, or to handle any other home lending needs you may encounter.