Inherited property is like any other property you own, provided you have legal proof the title is in your name. You can refinance or sell the property at any time. If the property is your primary residence, you will be able to borrow more than if it is a second home or a rental property. Check with the title company to be sure you have clear title to the home. If it is in probate, you may have to wait for some time before you can borrow against it.
Inherited Homes
Inherited homes may have an existing mortgage or they may be free and clear. Any new loan would pay off any existing lien, and the new mortgage would be in your name. If the title company finds any other encumbrances recorded against the property, the escrow company will pay them from the proceeds of the new loan.
Refinancing
If the property is owner occupied, you can borrow up to 80 percent of the appraised value. If it is a second home, the amount you can borrow depends on the lender you select. Some will loan up to 80 percent, but others will limit you to 70 percent. Of course, you will need to meet all the other lender requirements. If you will be using the home as a rental property, your loan amount will probably be limited to 70 percent of the appraised value.
Qualifications
Qualifying for a mortgage loan requires good credit, good job stability and equity in the property. Most lenders require a credit score of 720 or higher, verification that you worked for the same employer for two years or more, and that you have a minimum of a two month cash reserve. You may need to prove that you have a six month cash reserve if the property will not be owner occupied. In addition, an appraisal will have to show that the property is in good condition.
Considerations
If you decide to take cash out of the property instead of selling it, be sure you will be able to pay the mortgage payments, property taxes and insurance. If you plan to rent the home, be sure that you thoroughly check out any perspective tenants. This is especially true if you do not live near the home. Think carefully about whether you want to take on a property owner's responsibilities or if you would prefer to sell the home instead.
Tags: appraised value, cash reserve, home rental, home rental property, month cash