How to Refinance Inherited Property With No Mortgage

No one wants to endure the loss of a loved one. Eventually though, virtually everyone has a loved one who dies. Sometimes at family member or close friend has a house they own free and clear, which they leave to their loved one. Sometimes they leave the house to just one person, or sometimes multiple siblings inherit the home equally. The people who inherit the home do not have to keep it paid off. If they want to take a loan on it they can, and there some good reasons for doing so.


Step 1

Discuss the reasons why you want to refinance the home with everyone who inherited it. Everyone who now has an ownership interest in the home should make a decision about what it is they want to do with it. If your parent left it to you and your two other siblings equally, then each of your other siblings has an equal say in what happens with a home. Either you or one of your siblings may wish to live in the home and obtain a cash-out refinance to buy out the other siblings' interest.

Step 2

Decide how much loan you want to take out on the home and what the proceeds will be used for. If this loan is being taken out to pay off other siblings, you may want to put all of this in writing before applying for the mortgage. Knowing what terms you want and what your loan amount will be will help you when you find the right mortgage for the home.


Step 3

Call your mortgage lender and explain that you inherited the home and you need to pull cash out of it. Typically, lenders consider any loan for a home that does not currently have a lien as a cash-out refinance. Some lenders make exceptions for inherited properties. You should talk with several mortgage lenders to see if you can find one that will not force you to pay the higher interest rate a cash-out refinance usually requires.

Step 4

Apply for the mortgage loan with your preferred lender and provide all of your required documentation, including proof you inherited the home. The lender will take all of the documentation and submit it to the company for approval before you'll be allowed to close a mortgage.


Step 5

Keep your other siblings apprised of the mortgage process and when you expect to close the loan. This communication can be key for keeping the relationship between you and your siblings strong during this stressful time. You should notify your siblings once you receive your final approval and are ready to close the loan.

Step 6

Attend your mortgage closing and ensure the title documentation shows you are the owner and not the deceased family member who gave you the property. The loan officer should have forwarded your inheritance paperwork to the title company so that they could legally change ownership of the home. Tell your mortgage closer to provide separate checks for each and your siblings who are receiving part of the proceeds from a cash-out refinance. These checks will be made out directly to them, which they can then deposit into their own accounts.