Inherited a House—Here’s What You Should Know Before Committing
You inherited a house but wait! Find out if this new property is worth keeping or listing before committing. Here’s everything you should know and ask first.
Did you know that 30% of U.S. households could expect some sort of wealth transfer over their lifetime? In most cases, this takes the form of inheritances, particularly real estate properties.
Parents are often the main sources of these inheritances – 40% of them say they plan to leave one to their kids.
Either way, being an heir or heiress is something be grateful for. But there’s a lot more to inheriting a house than just transferring its ownership over to your name.
If you inherited a house, you could also have inherited other financial responsibilities. For starters, there are outstanding mortgage debts and property taxes. It’s even possible that there’s a lienholder somewhere.
All that said, we’re here to show you what you can – and should – do as soon as you learn the news about your inheritance. So, keep reading before you sign that contract!
Check if You Inherited a House along with a Mortgage
Did you know that only a third of Americans are mortgage free?
That’s right. Most U.S. homeowners are still paying off the debts on their houses. At the end of 2017, the average mortgage debt sat at $200,935 per borrower.
This is why the first step on what to do when you inherit a house is to check if there’s still a mortgage on it. Especially if that property is in Idaho, where 64.36% of homes still have a mortgage.
If the property has outstanding mortgage payments, you’ll inherit the debt too. In this case, you’ll shoulder the responsibility of paying back the debt.
Inheriting property almost always means that someone passed away. For those left behind, this can be an emotional roller coaster ride. Mortgage lenders understand this, but this won’t stop them from collecting payments.
This is why you should check how updated the mortgage payments are on the property before you commit. It’s not rare for inheritance homes to be delinquent, with many even already in default. Your inherited house may be part of the 4.06% of mortgage delinquencies in the last quarter of 2018.
Depending on the terms of the mortgage, a few months of delinquent payments can turn into a default. Once the loan reaches this stage, it will enter the pre-foreclosure stage.
Let’s say your inherited property is in Boise, and it’s been delinquent for three months. The lender should then send a notice of default. If you accepted the inheritance, you only have up to 120 days to pay the dues to avoid foreclosure.
The Possibility of Property Taxes Still Owed on the House
While property taxes aren’t as huge as mortgages, they still totaled $304.6 billion in 2018. That represents a 4% increase from the year before.
Furthermore, all states (except for six) saw an increase in property taxes. In Boise, Idaho, homeowners paid $2,629 in property taxes that year.
So, aside from an existing mortgage, check if there are still property taxes owed on the house, too. As with a mortgage, you may also end up paying these taxes in case you want to take ownership of the house.
Keep in mind that unpaid property taxes may lead to seizure of the house. You’ll lose the property, and worse, you may still have to pay fines and penalties.
The Current Value of the Property
Granted, anyone who inherits something, be it a house or an antique car, would be grateful. But the responsibilities that come along with the inheritance may be too much to bear. Especially if you inherit a house that’s already in disrepair.
That said, don’t delay paying a visit to the property to check its condition!
This way, you’ll have the chance to determine if it’s in great or even pristine condition. If the previous owner left everything to you, including valuables, take an inventory. From here, you can come up with a rough idea of the property’s value.
You can then use this to help you figure out whether to commit to the inheritance and keep your home or sell it off.
The Costs of Maintaining and Repairing the Property
Before you commit to inherited property, take a look at how much it’ll cost you to maintain this other home. Especially if you plan to rent it out as a “Section 8” property. In Boise, the Housing Authority Inspections is strict on checking out such rentals.
Aside from maintenance, there are also possible home repairs you need to carry out. From roofing and plumbing leaks to faulty HVAC systems, the costs can be quick to rack up. It’ll be even more expensive if there are sagging floorboards or water damage.
If you’re going to keep that inherited home, all these are expenses you need to shoulder. Now, ask yourself if your finances can afford these costs. If you rather not have more worries, it may be a better idea to sell it off.
Selling Your Inherited House
Many people who want to sell an inherited property either get it listed or sell it on their own.
If you go for the first option, you need to make sure the house is in great condition. Otherwise, the real estate agent won’t be able to find you a buyer. Remember, home buyers are in the market looking for a place they can move into right away.
Choose the “For Sale By Owner (FSBO)” route, and you have to prepare, clean, and stage the house all on your own. There are also the repair and marketing costs of an FSBO listing.
You actually have a third option, which is to sell to a property investor. These real estate investors buy homes as is, without the need for the homeowner to fix or stage the house. Some even purchase dilapidated homes!
Choosing the Best Route for Inherited Properties
The final decision on what to do if you inherited a house is still up to you. But at least now, you know the responsibilities that come with inherited properties. By considering all these factors, particularly mortgages, you’ll know what you’re getting into.
If you think it’s too much trouble to keep an inherited house, consider selling it to an investor. It may be your best bet to avoid the burden of maintaining another property.
Ready to explore your options when it comes to selling an inherited house? If so, then please feel free to connect with us now! We’ll be happy to answer any questions you have about teaming up with a reliable real estate investor.