My mother-in-law recently passed away. The house is to be put in the names of her six children. There is a home equity loan of $11,000. Will this stop the transfer of the home to the six siblings? Of what other things should we be aware?
Clearly the loan will have to either be paid off or assumed by the new owners. Depending on how the family structures the ownership (a joint tenancy among the six siblings or a family trust, for example) managing the loan payments could be a challenge. Some families can handle that sort of thing easily; others struggle with it. Just know that if the bank doesn't get paid on time, the house could be in jeopardy or the bank could press for a complete payoff, which could require you to raise the money from amongst the group, find financing elsewhere, or force a sale of the house.
You should also discuss in advance how the siblings will handle the inevitable request of one or more of the group to get bought out. Things may be fine now for all of the siblings, but a financial setback could mean that some of the siblings will need to come up with cash to buy one or more of the group out. That could involve a refinancing of the house, which would mean the payoff of any existing balance on the current home equity loan.
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Clearly the loan will have to either be paid off or assumed by the new owners. Depending on how the family structures the ownership (a joint tenancy among the six siblings or a family trust, for example) managing the loan payments could be a challenge. Some families can handle that sort of thing easily; others struggle with it. Just know that if the bank doesn't get paid on time, the house could be in jeopardy or the bank could press for a complete payoff, which could require you to raise the money from amongst the group, find financing elsewhere, or force a sale of the house.