Inheriting a home can be a boon, especially if you have been in the market for a house of your own. But when you inherit a house with a mortgage, there is a lot of responsibility on your shoulders: managing the property, taking care of it, and paying the mortgage payments.
If you have inherited a home with a mortgage, ask yourself these questions:
What Type of Mortgage Does the Home Have?
Knowing what type of mortgage is attached to the house will tell you a lot about how you will be moving forward. For example, if there is a conventional mortgage on the home you can simply assume the mortgage. Or, if there is a reverse mortgage, you will have to pay it back through the sale of the house or refinance the mortgage to another loan.
Do You Want to Assume the Mortgage?
If you want to assume the mortgage of your inherited house, you will be taking over making monthly payments and will be fully responsible for any missed payments. If you choose to, you may be able to refinance.
Do You Want to Sell the Home?
If you do choose to sell the home instead of living in it yourself, choose a realtor that specializes in selling inherited properties, like those at Merchant of Homes. We have years of experience selling all types of inherited properties, from houses to farms.
If the profits from the home exceeds $250,000, you will have to pay a capital gains tax. Capital gain occurs when a property is sold for more than what it was purchased for.
Did You Co-Sign the Loan?
Before you inherited the home, did you co-sign on the loan? If so, you will be responsible for the mortgage and inherit that debt. If you did not co-sign the loan and someone else did they will be responsible for the debt, regardless of their property rights.