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When you inherit the property of a loved one, you might feel that you don’t have enough money to pay for the bills and make necessary repairs. However, there are many ways to get rid of the property without trouble. You can use it as collateral for a loan or sell it if you do not need it now.
So, if you are looking to borrow money on the property you inherited, you have found the right guide. In this guide, we will talk about what is inheritance loan, what are the borrowing options you have with inherited property and the benefits of taking an inheritance loan.
Let’s first start with a loan on inherited property.
What is Inheritance Loan?
An inheritance loan is referred to as an estate loan, inheritance advance loan or probate advance loan. It is sometimes mistakenly used interchangeably with an inheritance advance. However, there is a key difference between these options for inheritance funding. An inheritance loan allows you to borrow against your inheritance, using your inheritance as collateral for the loan.
Notwithstanding being called a loan, you typically cannot get an advanced inheritance loan from a traditional lender. So, when you apply for a loan, your lender evaluates your loved one’s estate and determines how much you stand to inherit from the estate. These lenders then create a loan for you based on that amount.
Generally, the lender offers an immediate payment that is less than your full inheritance amount at a fixed interest rate. As a return, you give the lender the right to receive the full amount of your inheritance when the probate period ends. It means you assign your lender the right to your inheritance to repay your loan plus interest.
What are the Benefits of an Inheritance Loan?
With an inheritance loan, you can receive a portion of your inheritance without any waiting time. You can then use this money as you see fit, such as by covering funeral costs, mortgage payments or debts. After a loved one’s death, the last thing you wish to worry is about money. So, an inheritance loan can help you with that. Also, you can avoid the stress of wondering how you will cover the immediate expenses that may occur due to sudden changes in your life.
Disadvantages of an Inheritance Loan
Inheritance loan may have advantages, but it is not exempted from disadvantages as well. So, when getting your inheritance loan, consider its disadvantages as well. Following are a few disadvantages of inheritance loan:
The lender is involved in the estate’s probate: Probate is the entire process of administering a dead person’s estate. An inheritance loan introduces a stranger into the probate process, which can extend the process, add conflict between you and your family or even disrupt the case. Probate lending is often the cause of conflict than any other source. It also includes handwritten wills and disinheriting family members.
Risk and cost of an interest rate: Inheritance loans are generally costly. Especially, if you compare it to what you receive ultimately. If you get a loan and the probate goes quickly, you can lose a large portion of your inheritance in exchange for getting a portion of your money a few weeks earlier than you otherwise might have. It also depends on how long the probate process takes, you can face a high-interest rate, even for small inheritance loans.
Risk of predatory lenders: Since probate lending is largely unregulated, the lenders can predate customers. The ill-informed people who don’t know much about the probate process, are the easiest to fall prey to these lenders. If you want an inheritance loan, make sure you carefully review the information the lender provides to ensure that you understand what you stand to gain and what you could lose.
What is an Inheritance Advance?
An inheritance advance, also known as an inherited cash advance, estate advance, probate advance, and probate cash advance, is another choice for getting your money. A cash advance on your inheritance from your loved one’s estate is known as an inheritance advance. An inheritance advance company, like an inheritance loan, estimates how much you would inherit from the estate and then makes you a cash offer based on that amount.
However, because this money is not a loan, there is no interest to pay and there is nothing owed. Instead, you give a portion of your inheritance to the business, and following the completion of the probate process, the estate pays the business.
Do I qualify for an inheritance cash advance?
If you have an inheritance property of at least $10,000 from your loved one’s probate estate, you are eligible for a probate advance. However, the probate estate should be open in the process of being opened. If you are not sure about the amount you will receive in your inheritance, you can reach out to us for a complete estimation.
It is worth mentioning here that you can still qualify for cash advance even if you have credit problems like discharges in bankruptcy, foreclosures or delinquencies. A poor credit score can also prevent you from receiving an inheritance advance. So, obtain a copy of your credit report to prepare for funding. This is primarily used to determine if there are child support payments, bankruptcy proceedings or judgements that could impact the assignment’s eventual payment.
Inheritance Loan vs. Inheritance Advance
So, which option is better? an inheritance advance is better than an inheritance loan as there is no interest and no monthly payments. Unlike an inheritance loan, an inheritance advance allows you to pay a flat fee from your inheritance. If you work with inheritance funding, we can take care of all your arrangements. So, once you are approved for the cash advance, you are done and do not have to worry about payments again.
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