My parents passed away recently, and my aunt and I inherited their home. It’s paid off, worth about $650k in Southern California. Needs some work but nothing egregious (probably around $30k in necessary repairs, another $20k in cosmetic).
After talking with her, she agreed on buying her out at $200k.
My partner and I make about $180k combined, and are currently renting at $3k per month.
It took a chunk of savings and some credit cards to pay for my parent’s hospice, funerals and about $15k in property taxes owed. All in about $30k in debt from all of that. Before, it was 0 debt except some student loans and we would pay off cards every month.
What’s it best way to finance all of this? I’m speaking with an estate attorney for all the finer details on the property, but is a mortgage at current rates the best way to pay my aunt + consolidate the debt? With the house paid off, is there a better option to tap into equity? Since we were already paying $3k comfortably, I feel confident we can aggressively pay down a $250k loan, and we may even decide to sell it once it’s in sellable condition.
What’s the best path here?
Inheriting a home, buying out my aunt
byu/handofreason inpersonalfinance
Posted by handofreason
5 Comments
Id shop mortgage options for the $200k buyout and see how a HELOC stacks up, especially if youre selling after repairs
> we may even decide to sell it once it’s in sellable condition.
If that’s the case, just sell as is. It’s the least costly choice and smarter option considering your ultimate goal of selling. And for cost basis, it makes total sense since you get step up.
I feel sorry for your loss! From a financial standpoint, I think that $200k buyout on a $650k paid off home in SoCal is truly a strong position to hold.
A mortgage loan to buy out your aunt and consolidate the debt is a brilliant idea if the monthly payments are matching or close to your current rent.
Is there anything else in the estate that your aunt could get from the estate instead of the house? You guys are on the brink of triggering a second property tax reassessment. The first would be when it went from your parents to your aunt, and then again from your aunt to you. Consult with the estate planning attorney to see if there is any way to avoid it (I honestly don’t know if it is avoidable at all given how you’ve described this). Also will she wait for you to get a HELOC?
Is your aunt willing to hold the mortgage until you could pay it off with a traditional mortgage?