Q: My mother passed away. I am both her only heir and executor of her estate can I borrow against her home to pay off debts
I was living in the home for 6 years and have been paying the mortgage since her death. The house is her only asset and is in probate. Have been told I have to sell it to pay off her debts. Have a lender who will give me a home equity line of credit if my name is on the deed.
A: No lender will recognize your authority until you are appointed as executor by the probate court. Keep in mind also that all debts (except the mortgage) eventually expire if you can fend them off long enough.
A: Have you already filed probate? This sounds like a situation where you could have taken out a loan against the house without filing probate and done what you propose to do. (But only if there weren't other issues that required a probate to solve.) But if you have already filed probate you need to finish the process. I don't see any reason why you can't take care of the debts the way you are proposing by taking out a loan secured by the house but now you have to run it by the court and get permission to do this. Keep in mind that the debts that you have to pay include the Attorney's Fees for the Attorney you hired. If the Attorney won't help you do this then you may need to get another Attorney.
A: Ms. Whitehurst, your statement that no lender will recognize this heirs authority is incorrect. I have assisted in sales of real estate without probate for years. In Oregon we use title companies and title companies will endorse sales of real estate without probate and lenders will lend against these properties in these sales.
As for your statement that all debts will expire, that is a dangerous statement to make. Some creditors will file lawsuits and get Judgment Liens. The State of Oregon will vigorously enforce Medicaid debts that are liens against all of the decedent's property. Back property taxes are already becoming liens against the house and will lead to an eventual foreclosure. Sure, some debts may get vanquished by the statute of limitations. But you just can't count on that happening.
To the asker: You probably won't be able to structure this as just getting a HELOC and paying off the debt. What it will probably look like is you buying the house from the estate and securing a loan against the house to do this. You petition the court to allow yourself to buy the house for the cost of the debts owed and once the court approves this you get the loan and sell yourself the house. So you better apply for financing to buy a house and make sure you qualify although the good news is you will be buying it just for the cost of the debts and expenses of the probate.
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