What happens when you inherit a house? If you find yourself in a situation where you have inherited a house, the first thing to understand is whether or not there is still a mortgage.
If you inherit a house with a mortgage, you, unfortunately, inherit the mortgage as well which can be a big financial cost.
But, what if you’re in the opposite situation?
Are you wondering, what should I do if I inherited a house that is paid off?
This is the best-case scenario when inheriting a house in California or anywhere else for that matter. You are left with a few options on what you can do with your mortgage-free home.
- Keep the house
- Become a landlord and rent out the property
- Sell the house on the open market
- Sell the house fast
We go into detail on each of the four options below!
What Should I Do if I Inherited a House with No Mortgage?
In most circumstances, you inherit a house unexpectedly so it’s common for beneficiaries to ask, what should I do if I inherited a house with no mortgage?
We are here to help! We have gathered a list of four options on what to do with your newly inherited home.
1. Keep the house
What to do when you inherit a house with no mortgage? Naturally you can keep the house – this option seems obvious!
With no mortgage payments, the house becomes an added asset. If you choose, you can move into the inherited home and make it yours.
This is a great option for those who are renting or have a mortgage on their current home as you will no longer have to incur those monthly payments.
Before deciding to live in an inherited house, understand if there are any necessary renovations that would need to be done. It is important to know this for your safety and to get an estimate of the added expenses incurred on renovations, remodeling, or repairs. Depending on the condition of the house, these can be heavy expenses to cover and you may want to prepare ahead of time to set aside adequate resources as well as the time needed to remodel.
Additionally, it’s also important to understand any other costs of moving in such as, heating expenses (especially if it’s an old house) or fuel expenses if the house is located in a remote region where basic necessities may not be readily available.
2. Become a landlord and rent out the property
What else can you do when you inherit a house with no mortgage? You can alternatively rent the house out if you do not want to move into the home but would like to keep it.
By renting you would create a new source of income for yourself.
But, it is important to understand the responsibilities and obligations of being a landlord before making this decision.
Some key things to consider when understanding how to transition the property into a rental property are ensuring the house is safe for tenants, switching insurance to a rental property, and understanding what to do with problem tenants. In addition, any repairs or remodeling work needed to make the house safe and habitable for tenants will have to be borne by you. So again prepare an estimate as to the extent of repairs and renovation that would be necessary in that case.
3. Sell the house on the open market
If the above two options don’t suit you and you’re still wondering, what should I do if I inherited a house with no mortgage, you may want to consider selling the inherited property on the open market.
Since the house does not have a mortgage, any money made on selling the house will only be profit.
You may consider using the services of a broker to help you sell the inherited home but understand that you will have to pay a standard commission on the completed sale of the house.
There is a downside of selling the house on the open market that you will want to consider. It may take a while to find a buyer when selling on the open market. Plus there is the possibility that potential buyers will not qualify for a loan to purchase.
Why it matters:
The longer your house is on the open market, the more expenses you will incur such as taxes, insurance, etc.
4. Sell the house quickly
If you’re worried about not selling the house on the open market quick enough and hoping there’s still one more option to what should I do if I inherited a house with no mortgage, you’re in luck!
You can decide to sell the house quickly for cash to investors. This means that you will not have to pay any agent or agency fees and you will not have to worry about finding a buyer with the necessary funds or say a loan. It also means that the house can be sold in a short period of time.
Plus by selling to an investor, there is no need for renovations as investors often buy the house as it is. No costly renovations, no unnecessary time spent on revamping, and no need to monitor the work. All you have to do is sell your house in the existing condition to investors who will pay you cash and take care of the rest.
You also eliminate the cost of advertising on the open market.
Why sell for cash?
If you sell the house for cash you eliminate the risk of a potential buyer’s failed loan approval and you get instant cash in your pocket.
Now when you ask yourself, what should I do if I inherited a house with no mortgage, you know what options you have.
Your choice in the above four options is completely dependent on your surrounding circumstances and your financial position, the tax associated with inheriting property; the current status of the real estate market etc.
If you’re still unsure which option for what should I do if I inherited a house with no mortgage is best, we advise seeking advice from a tax accountant and/or a financial adviser to get the best possible idea of your options.
If you feel that the fourth option is what is best for you and you’re thinking, “I inherited a house and want to sell it … and I want to sell my house fast,” you’re in luck!
Thanks for reading our article: What Should I do if I Inherited a House with No Mortgage?
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