Ask Me Help Desk - Can I keep grandmoms house if there is an equity loan out on it

Can I keep grandmoms house if there is an equity loan out on it

I am a live in care giver for my grandmother who just suffered a stroke at 80.I am worried she doesn't have long for this world.When I came in to take care of her she made a new will bequeathing me the house.Before that she took out a small equity loan against her house.Is there anything I can do to insure that her finally wished be carried out,me keeping the house?

A Will would have served that purpose... did she have one before her health worsened?

Quote:

Originally Posted by smoothy

A Will would have served that purpose...did she have one before her health worsened?

Yes naming me the beneficiary of her estate.

Then you should have no concern. Assuming her debts upon her death don't exceed the value of the estate.

Quote:

Originally Posted by smoothy

Then you should have no concern. Assuming her debts upon her death don't exceed the value of the estate.

So the bank or lender will work with me in repaying the loan whatever at the time is due? Will I have to be on the deed?

That's what a will is for, to make sure a person's wishes for the distribution of their estate is carried out. You will probably have to submit the will for probate upon her death. If there are no challenges then it should be simple.

The loan will be against the property, not the person. So, in the case of a death, the lien passes to the new owners. As long as you make the payments on the loan the lender should not care. You should have the property transferred into your name as part of the probate process.

Quote:

Originally Posted by ScottGem

That's what a will is for, to make sure a person's wishes for the distribution of their estate is carried out. You will probably have to submit the will for probate upon her death. if there are no challenges then it should be simple.

The loan will be against the property, not the person. So, in the case of a death, the lien passes to the new owners. As long as you make the payments on the loan the lender should not care. You should have the property transferred into your name as part of the probate process.

So I shouldn't be put on the deed... Hopefully I won't have to worry about this for years to come.But at 80 health issues are more severe.When I came in to help out,she did tr and get me to put my name on the deed but I drug my feet on the subject.Her line of thinking at the time was I shouldn't have to worry.. And thanks to all of the advice and help

You shouldn't have any worries, but keep in mind that a will can be changed right up until the last breath or ability to write, (usually with a legal professional present, and two witnesses, but there are exceptions, and laws vary by state).
Sometimes other next of kin do challenge wills in court, especially closer kin.
It might be a good idea to have a copy of the will... my mother made all 3 of us children pretty much the same 'promises' that she was leaving us this or that, and none of it was true. Everyone assumed that she would outlive my father, but she didn't, so everything went to him anyway, and there was only minor squabbling over little treasures.

Quote:

Originally Posted by JimKy

So I shouldnt be put on the deed.

Here's the thing. If you were put on the deed, it would be considered a sale of the property and there may be tax consequences. If you wait until her demise, then you get the property as per her will. There still may be probate costs and the rest of the estate will need to cover the debts of the estate.

At her death, the estate, will deal with debts and assets. The estate can continue to pay on the loan, if needed. Or arrangements to pay bank can be make.

This is common

There can be advantages to being ADDED to the deed (with right of survivorship), because then it bypasses probate, and if it turns out that you can't afford to live there, you can put it up for sale immediately. And if she has very little in assets you can avoid probate altogether. You would owe only a few minor fees to change the deed, fees you would owe anyway after she dies, and since no money is changing hands and she isn't giving you the house, you don't owe the IRS.

As for her estate paying back the loan, I have a feeling she doesn't have enough assets to do that, or she wouldn't have taken out an equity loan? Plus, no where here have you said that she is leaving you her entire estate, just the house. So the estate won't pay back the loan.
The loan payments will be yours to pay, along with property taxes and so on. You should sit down and figure out what they will all be. Owning a house isn't cheap, even when you own it outright.

Quote:

Originally Posted by joypulv

So the estate won't pay back the loan.
The loan payments will be yours to pay, along with property taxes and so on.

Until the property is transferred to the OP's name, that is not correct. As long as the property is in the deceased's name, the estate is still responsible for payments.

Quote:

Originally Posted by ScottGem

Until the property is transferred to the OP's name, that is not correct. As long as the property is in the deceased's name, the estate is still responsible for payments.

Right. I was assuming being on the deed. I was also looking past the end of probate, and was assuming that the deceased won't have the assets to pay off the loan.

Quote:

Originally Posted by joypulv

There can be advantages to being ADDED to the deed (with right of survivorship), because then it bypasses probate, and if it turns out that you can't afford to live there, you can put it up for sale immediately. And if she has very little in assets you can avoid probate altogether. You would owe only a few minor fees to change the deed, fees you would owe anyway after she dies, and since no money is changing hands and she isn't giving you the house, you don't owe the IRS.

As for her estate paying back the loan, I have a feeling she doesn't have enough assets to do that, or she wouldn't have taken out an equity loan? Plus, no where here have you said that she is leaving you her entire estate, just the house. So the estate won't pay back the loan.
The loan payments will be yours to pay, along with property taxes and so on. You should sit down and figure out what they will all be. Owning a house isn't cheap, even when you own it outright.

Yes the whole estate will be mine to handle.Yes you are correct she doesn't have the money to pay back the loan outright.And Im glad to report granny isn't dead but quality of life has dropped from the stroke.Thanks for the advice and help in easing my worries... With that said,I think owning a house would be cheaper than rent.I know what the monthly/yearly cost of owning this house is with insurance,taxes,and the repayment of the equity loan.By far owning this house would be cheaper on a monthly basis than renting anything where I live(Kentucky)