Can I Get a Loan on a House in Probate, in California?
The real estate probate process in California can be complex and confusing, so it tends to generate a lot of questions. One common question we encounter is: Can I get a loan on a house that’s in probate in California?
The short answer is yes. Probate loans, as they’re known, can be very useful at a difficult time in a person’s life. We offer this type of financing, so please feel free to reach out with any questions you have. In the meantime, you can learn more below or by visiting our probate loan page.
The Probate Process in California
If you’re researching the process of getting a loan on a probate property, you probably already know what “probate” is. You might even be actively involved in the process, as an heir or beneficiary. But for the uninitiated, a quick definition will be helpful.
Probate is the legal process set up to administer a deceased person’s estate and assets. According to the California Judicial Branch, probate means there’s a court case in process to accomplish the following objectives:
In California, probate real estate situations are usually managed by an executor (if there’s a will) or an administrator (if there is no will). These individuals serve as a representative of the court and oversee the transfer of real estate and other property to the beneficiaries.
It’s important to realize that this process can take months. The California Courts website states that “the entire [probate] case can take between 9 months to 1.5 years, maybe even longer.” This is why heirs and beneficiaries often seek ways to obtain financing based on their inheritance, without having to wait for the courts.
And that brings us back to the question at hand. Can you obtain a loan on a California home that’s currently in probate?
Can I Get a Loan on a House That's in Probate?
In many cases, houses that are in probate have a lot of equity built up. This equity can be used to provide much-needed financing, through what’s known as a probate loan.
A California probate loan (also known as an estate or inheritance loan) is a short-term financing product that allows you to borrow against property that’s still in a probate status.
These types of loan are typically offered by hard money lenders, as opposed to traditional banks and lenders. Probate loans haven’t been around that long, but they’ve quickly become a “tool of choice” for heirs and beneficiaries involved in a probate case.
The money can be used for a variety of purposes and often proves necessary. During the California probate process, heirs to the estate might incur a number of expenses, including funeral costs, legal fees, outstanding debts, mortgage payments, and property maintenance. A probate loan allows you to leverage the home’s equity to cover expenses, instead of paying out of your own pocket.
How Does the Process Work?
The process of getting a loan on a probate property can vary from one transaction to the next, due to a number of variables. In California, the process usually works like this:
With this type of financing, your inheritance (the property) serves as collateral for the loan. Unlike a regular mortgage, which might have a repayment term of up to 30 years, probate loans are typically made for a much shorter period of time, typically 3 – 5 years. Borrowers make monthly payments during that time, usually a interest only payment to keep the payments low.
The amount you can borrow when using a California probate loan will depend on the value of the home in question, among other factors. All parties to estate, along with the administrator or executor, have to agree to the loan. But this is generally not a problem, since the funds can help satisfy and close the decedent’s estate.
The probate lending process usually works faster than a traditional mortgage loan. We’ve been able to process loans within two weeks in some cases, once all interested parties agree to the transaction.
Summary, and How We Can Help
We’ve covered a lot of information in this article, so let’s revisit the key points:
Questions? Independent Lending offers probate loans to clients throughout California. We specialize in hard money, private money and specialty loans and know how to get them done quickly. Please contact us if you have questions about obtaining a loan on a house that’s in probate.