I Inherited the Family Home. What Now?
Nobody wants to think about losing a parent or other relative, but it’s a fact of life, and it may result in your inheriting their property. For example, your parents may have paid off the family property so you and any siblings could stay in the neighborhood you’ve always called home.
Making decisions about an inherited property can be highly emotional, especially if your siblings or other relatives are co-heirs. This is why, before making a lasting decision, it’s best for you and other involved parties to agree to postpone this for a few weeks if possible.
If you’re the sole heir, you may want to visit an attorney or tax consultant to discuss your new financial responsibilities. Currently, there are no inheritance taxes in Hawaii, but there is a progressive estate tax. It’s lower for lower-income earners, then gets progressively higher for higher-income earners. There will also be a real property tax payable annually.
• If the balance is relatively low, you and any siblings could agree to pay it off from your own assets.
• If you’re not able to pay off the balance with your own assets, you may be able to assume the current mortgage and take over the monthly payments or qualify for a new mortgage.
• If there is a reverse mortgage (HECM) in place, you and any other heirs will be required to repay the balance. Your method of repayment is up to you and will depend on your current finances and if you own another property. You may be able to qualify for a new mortgage to pay off the HECM balance. Most lenders who specialize in reverse mortgages will allow you at least one month - usually longer — to make a decision per HUD guidelines.
Sources:
https://www.hud.gov/sites/dfiles/SFH/documents/inheriting_hecm_09-23-19.pdf
https://www.hawaiihomemag.com/keep-the-family-together-if-you-inherit-a-home/
Making decisions about an inherited property can be highly emotional, especially if your siblings or other relatives are co-heirs. This is why, before making a lasting decision, it’s best for you and other involved parties to agree to postpone this for a few weeks if possible.
Options for inherited properties
Unless stated otherwise in a will or legal document, you’ll have three options: live in the home, rent it out, or sell it.If you’re the sole heir, you may want to visit an attorney or tax consultant to discuss your new financial responsibilities. Currently, there are no inheritance taxes in Hawaii, but there is a progressive estate tax. It’s lower for lower-income earners, then gets progressively higher for higher-income earners. There will also be a real property tax payable annually.
Inherited homes with mortgages
If the property has an outstanding loan balance, don’t assume you must sell the home immediately to pay it off, especially if you want to keep it. Depending on the type of mortgage currently in place, and the balance owed, your options will vary.• If the balance is relatively low, you and any siblings could agree to pay it off from your own assets.
• If you’re not able to pay off the balance with your own assets, you may be able to assume the current mortgage and take over the monthly payments or qualify for a new mortgage.
• If there is a reverse mortgage (HECM) in place, you and any other heirs will be required to repay the balance. Your method of repayment is up to you and will depend on your current finances and if you own another property. You may be able to qualify for a new mortgage to pay off the HECM balance. Most lenders who specialize in reverse mortgages will allow you at least one month - usually longer — to make a decision per HUD guidelines.
Meet your local home financing experts
No matter what the situation, your local lending experts at Compass Home Loans are ready to discuss your options. Contact us today for a no-obligation chat, or to apply for financing.Sources:
https://www.hud.gov/sites/dfiles/SFH/documents/inheriting_hecm_09-23-19.pdf
https://www.hawaiihomemag.com/keep-the-family-together-if-you-inherit-a-home/