Inheritance Loan Rates
You may have heard about inheritance loans and wonder if you can get one and how much they cost. Inheritance loan rates can vary just like with any other loan. To get a better idea of how much you can expect to pay, you should understand some basic information about inheritance loans.
Why Would You Need an Inheritance Loan?
First, you may need to know why you should consider an inheritance loan if you will be getting an inheritance. When someone dies, their estate must go through probate unless it has been set up as a trust. An inheritance lender allows you to get your inheritance money faster.
The Probate Process
Probate is a legal process that allows for the distribution of the assets of an estate to its beneficiaries. It begins when the petition to open probate is filed with the county court along with the will if one exists.
The probate court will verify the validity of the will and appoint an executor to manage the estate. This person is usually named in the will. They have several jobs to perform, including distributing the estate to the heirs.
The probate process can take months or even years if there are delays. The executor of the estate must pay all creditors who submit claims against the estate. They must file taxes and take inventory of the assets of the estate. Only after everything else has been taken care of will the remaining assets be distributed to the heirs.
Challenges in the Probate Process
In a large or complex estate, the probate process can be delayed by claims made against it. Other beneficiaries may have objections to some aspect of the will. They may believe that the will isn’t valid or present another will that they claim is newer. A beneficiary may claim that the will was made under duress or undue influence. Any issues must be resolved with the court before the process can continue.
During this time, you could have bills piling up or you may be required to maintain the estate until it has been distributed if you are the executor. If there aren’t enough liquid assets or if you don’t have enough money of your own, you may need an inheritance loan to help you survive until the distribution. The assets of the estate cannot be accessed by the beneficiaries until all other tasks have been completed and the creditors have been paid.
How an Inheritance Loan Works
To recognize the rates used in inheritance loans, you will need to understand how these loans work. First, you should know that an inheritance loan is different from an inheritance cash advance.
A loan provides funds with an agreement that regular payments will be made with interest until the balance is repaid. An inheritance advance is a purchase agreement for a portion of the inheritance. The funding company purchases a portion of the inheritance at a fixed price and provides immediate payment.
With an inheritance loan, you will be charged an interest rate. This rate will be based on how long the loan is in effect, current interest rates, and possibly other factors. The interest continues to accrue as long as there’s an outstanding balance just like with other bank loans. The amount owed to the lender increases, which often means you get less of your inheritance. If there are delays, more interest will be added to the balance. Most loans require you to pay back the balance in monthly installments, which means you will be paying on the inheritance loan even before you get your portion.
With an inheritance cash advance, you know the fees that you are being charged upfront. They don’t increase or change, regardless of how long it takes to get through probate.
Because the inheritance cash advance is a purchase agreement, you aren’t obligated to pay the amount back. It comes out of the estate once it is ready to be dispersed. If something happens and there is no money in the estate, the risk is on the lender rather on you.
Know What You are Getting
An inheritance loan is often known by other names. It can be used interchangeably with an inheritance cash advance, but the two terms are separate. You may also hear about a probate advance, probate loan, or heir loan.
You want to know the terms upfront before you agree to either a loan or cash advance. The agreement should be transparent, so that you are aware of the cost and how it will affect the amount you will receive in your inheritance.
Before you agree to any inheritance loan or inheritance cash advance, you should ask questions and make sure you understand the terms. You can apply and get approved with no obligation to accept even after approval.
When considering a probate loan or inheritance cash advance, you’ll want to look at more than the rates. You should understand the process and how it works and all the terms that affect you.
With either an inheritance loan or an inheritance cash advance, you will need to fill out an application. The inheritance advance company will review your application, but it isn’t dependent on your credit history or employment status. Probate lenders look at the inheritance to determine approval. They will consider how far into the probate process you are and how much you will receive in inheritance money.
The inheritance loan company will consider lending up to a portion of your inheritance. They also look at risk to determine inheritance loan fees. The lender will talk to your estate attorney to decide whether to approve probate loans.
Once they have decided to approve your application for inheritance funding, they will provide you with an amount and the inheritance advance rates. At this point, you will need to decide if you want to accept the offer from the inheritance funding companies at their interest rate.
After you have accepted the inheritance advance cost or loan rate, you will receive the loan or inheritance advance in your bank account. One of the main benefits or working with a hard money lender is that you receive immediate inheritance funding without waiting for probate to be completed.
Before you decide on an inheritance funding company or accept one of the inheritance advances available, do your research. Check for any hidden fees that are part of the funding process. Probate lending can provide much-needed money with immediate inheritance funding, but it also reduces the amount you will receive later in your inheritance.