How to Refinance Inherited Texas Real Estate to Buy Out Heirs
Refinancing your Texas estate to buying out heirs occurs when multiple people inherit a property from an estate. Refinancing can often be a great equitable way to payout family members. This happens joint owners of an estate need to split proceeds with an equal share. A Texas beneficiary buyout is a common situation that we normally handle. This can happen when one or more heirs wants to keep the property and the others want to sell. Refinancing beneficial interest of the estate can sometimes tricky to navigate without legal advice. Once the heirs come to agreeable terms you will need to get the agreement in writing so that you properly document the refinancing of your state.
What Happens If I Inherit a Texas home With a Mortgage?
Inheriting a Texas home can become a financial burden for a family, especially if the home comes with a Texas mortgage. Under certain circumstances, you may be required to repay the entire loan in a very short time or even refinance the mortgage out of the original owner’s name. Refinance the mortgage during probate depends on your relationship to the person who named you as the beneficiary of the Texas home and the terms of the mortgage agreement they originally signed.
Texas mortgage refinance After Probate!
If you are an heir to a Texas house and you would like to keep that Texas home, you can refinance into a new Texas mortgage loan and take title to the Texas house out of the estate at the same time. Technically, this transaction can be both a Texas mortgage refinance loan and a Texas purchase mortgage at the same time depending on whether or not there are other heirs involved. Probate
When Texas heirs receive an inherited Texas property, it may create conflict among heirs that may wish to maintain ownership of the Texas real estate while others want to sell their share of the inherited Texas property and receive cash. These common issue typically results in the heir who wants to maintain ownership looking for a way to refinance the inherited property to buy out the other heirs (beneficiaries, siblings). If the heir who wants to keep the property doesn’t have cash to buy out their sibling’s interest in the inherited house they must pursue some type of refinancing for the inherited property. The heirs must come to an agreement on the value of the real estate and what amount of funds each heir will receive prior to refinancing the inherited property.
Refinancing inherited property generally isn’t as easy going to the bank to receive a conventional mortgage. Inherited property is typically in the name of the estate (probate) or trust. Getting a mortgage on an inherited property isn’t possible in most situations as banks will not provide a loan to a borrower who isn’t on title of the property. Refinancing a property with multiple heirs isn’t the type of loan request a bank is able to fund.
Refinancing a Texas Home with multiple heirs:
If you have inherited a Texas house with one or more additional heirs and you want to own the Texas house for yourself, you can agree to refinance and use the proceeds of that refinance to pay each heir the value of their share. This transaction is technically a refinance and a purchase, but since you have at least one share of ownership in the Texas house, you can usually use that share of ownership as your down payment or equity into the transaction so you will not need to make a cash deposit at closing.
Why would you need to refinance a Texas home that was inherited?
When a Texas homeowner passes away and leaves a Texas house to one or more people, the Texas house first goes into an estate that has to be distributed out after paying any expenses or debts of the estate.
For example, if you are left a home worth $300,000 but there was a $200,000 loan on the Texas house owed by the Texas homeowner who died, that $200,000 loan needs to be paid off before you will get the title and own the Texas house. With the increased use of Texas reverse mortgages for homeowners over 62, it is just as likely as not that a Texas house will have a Texas mortgage on it when the owner dies.
Texas mortgage loans cannot be issued to estates. Any existing liens on a Texas house in an estate will need to be settled. Even if there is no Texas mortgage or Texas house liens, there are often other expenses that need to be paid off before the estate is distributed. Usually, Texas mortgage lenders will work with the attorney handling the estate to establish a plan for paying off the loan through sale of the Texas house or refinancing by one or more of the heirs.
It’s vitally important that you consult with both a lawyer and a loan officer if you inherit Texas house that needs to be refinanced. They will be able to make you aware of any applicable state and federal laws and will be able to guide you on your best course of action.
Texas Probate Explained in “Plain English”
Because Texas and federal law may not be easy to understand, below you’ll find a collection of resources that help to explain the law in “plain English.”