Probate Loan Rates

Consider interest rates when you borrow money on an inheritance loan.

Probate loans allow an heir to receive funds against their future inheritance while the estate is in probate. It’s not uncommon for beneficiaries to need the money early before the assets are dispersed. They look for a probate loan to help them get by until they receive their inheritance. If you’re considering a probate loan, you need to understand how they work and how the probate loan rates and fees are determined.

How Probate Loans Work

A probate loan is similar to traditional bank loans. You borrow money and the probate lender requires you to pay back the loan with interest in monthly payments. You will continue to pay interest with the monthly payments until the balance is paid in full. This may happen when probate ends and the assets are distributed to the heirs. You may also hear them referred to as estate loans, inheritance loans, or heir loans.

While probate loans are similar to traditional loans, they usually come with a much higher interest rate. The rate is higher with estate loans because of the increased risk for probate lenders. They are providing inheritance funding based on collateral that doesn’t belong to you yet. The inheritance lending company will review your application and provide an offer based on your creditworthiness. Hard money lenders provide loans for people who may not qualify for a personal loan or other options.

Why You May Want a Probate Loan

If you’re waiting on an inheritance, you may think you should get a probate loan to gain access to your inheritance sooner. You may need the money to make mortgage payments on an existing mortgage, pay funeral expenses or attorney fees, pay creditors or other outstanding debts, or to meet other obligations if cash flow is limited.

Probate is a Lengthy Process

The probate process can take months or even years. This complicated process must go through the probate court for approval. Delays can happen throughout the proceedings, which can add months or longer onto the timeline. If you have already experienced some of these delays, you may like the idea of getting inheritance money now with estate loans instead of waiting for the entire process to be completed.

Raise Cash to Pay for Maintenance of Inheritance

There may be other reasons why a probate loan would benefit you. The estate may primarily consist of nonliquid assets, such as a home, business, and stocks. You may need an estate loan to pay for the costs of upkeep, such as utilities, insurance, and mortgage payments until the estate is settled. You might need to pay the funeral costs of the deceased or pay taxes for the estate. As the executor, you are also responsible for paying property taxes on any real estate or legal expenses for the probate estate. Probate lenders can provide the money you need to cover these expenses until the estate has been dispersed.

Buy Out Other Heirs with Inherited Property

Another reason to get a probate loan is to buy out siblings on inherited real estate property. This most often happens with the family home when one person wants to maintain ownership and the other family members don’t want to keep it. A probate loan would give you the money to buy out your siblings at market value. Once the inherited real estate property transfer is complete and the deed is in your name, you could get a traditional loan and pay off the probate loan.

Tax Benefits and Market Value

When you keep inherited properties that were gifted to you in a will, you pay the old property tax rate with a property tax reassessment and avoid capital gains tax on the property value until you decide to sell.

Should You Get a Probate Loan?

Are hard money loans the right choice?

This is not an easy question to answer. In most cases, if you have other financing options, it would be best to avoid a probate loan. You may be able to get a home equity loan, use your savings, or even pay with credit cards. If you don’t have other options, a probate loan can help you get through a difficult situation.

Before you decide on a probate loan, you can talk to a probate attorney and possibly your financial advisor or tax professional. They can help you understand the implications of probate loans on your budget and the legalities of taking on a new estate loan.

The probate attorney will help you determine how much you will likely receive from your inheritance and how long it will be. If you can wait for a few weeks and probate is nearly completed, it would be best to avoid taking out a probate loan. On the other hand, you must also consider how much interest on an estate loan you will be paying if it will be months before probate can be closed.

First Steps to Getting a Probate Loan

If you decide that getting a probate loan is right for your situation, you should notify the executor or the personal representative of the estate. Only they have the legal authority to provide information to other parties about your inheritance. They will need to provide documentation to the hard money lender for you to be approved for inheritance loans.

Don’t rush to get a probate loan even if you need the money. Take time to get offers for multiple probate loans. Compare those offers to see which probate lender offers the best rates and terms. It’s also a good idea to talk to the financial advisor or your estate attorney and ask their advice on which offer is best.

An Alternative to a Probate Loan

A probate cash advance, also known as an estate advance, is an alternative to a probate loan. Probate advances are also referred to as an inheritance advance or estate advance. With an inheritance advance, you know upfront how much money will be coming out of your inheritance and get money faster.

A probate advance is like a purchase agreement where the lender purchases a portion of your inheritance for a fee. You will still receive the remaining part of your inheritance money when the estate is distributed. It’s often the best way to get your inheritance early without putting yourself in a bad financial situation.

Higher Interest Rates

One of the biggest concerns with probate loans is the higher interest rates. A reputable hard money lender may charge a rate similar to what you would pay with credit cards that have higher rates. Other lenders may double or triple that rate to where it is difficult for you to make the payments. You could end up losing a significant amount of your inheritance.

Probate Loans Aren’t Always Easy to Obtain

While probate loans are done through hard money lenders who are in the business of lending money to people who don’t qualify for other loans, they do require a background check with a look at your employment history and credit history. If you don’t meet the minimum qualifications, your application will be rejected just like with traditional lenders.

How Rates are Determined with Probate Loans

Lenders use several factors to determine the interest rate for probate loans and the loan amount. They look at your credit rating with a higher rating translating into a lower interest rate. They also consider how much of your inheritance you want to borrow. Hard money lenders limit the amount a person can borrow to 50 – 60 percent. Some lenders will fund as much as 75-80 percent of the estimated inheritance money or real property.

Another factor is how long the probate process is estimated to take. If you are just starting the probate process, there is more risk that something could happen and you might not receive all of your inheritance.

A hard money lender will often set a timeframe for repayment of the loan, but they can offer extensions if the probate process hasn’t been completed. You will want to pay attention to the loan terms and fine print of any agreement you enter into with a probate lender.

Other Fees to Consider

The interest rate on these loans is the biggest expense you will incur. However, you should also find out about the origination fee, which is often listed in points. These points are added onto the interest rate. You may also have to pay an underwriting fee to cover the administrative costs of creating the loan.

If you are concerned about the high interest rates, fees, and making the monthly payments on a probate loan, you may want to consider a probate advance instead. Since you aren’t obligated to pay the money back with probate advances, you aren’t taking on any risk. You can get the money you need while waiting for your inheritance money. A probate advance doesn’t depend on your credit history or employment. It also doesn’t change how much you will receive with your inheritance.

A simple example of an inheritance cash advance is as follows: You receive $25,000 in a probate advance with a fee of $5000. When the estate is distributed, your portion of the inheritance is $50,000. The probate advance company gets their $30,000 back and you get $20,000. You know how much you’re paying the hard money lender for the advance and how much you will receive for your inheritance. makes it easy to apply for probate advances based on your future inheritance. Contact us to find out how much you can receive when you need funds immediately.