When faced with a long wait for an inheritance, many people start looking for ways to receive an early distribution in the form of an estate loan. An estate loan is a loan that occurs during probate that lasts for the term of the probate process and requires interest payments. Many times an estate loan has to be secured by assets outside of the estate. Along with needing to be collateralized by an asset, estate loans require credit checks and go through the full process of bank lending.
If you are in probate and are considering an estate loan, we’ll get into all the details in this article.
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Can You Borrow Money from an Estate?
Since the assets from the estate have not been transferred in title, technically, none of the assets are yours which makes it very difficult to borrow money. You can try to get an estate loan, but most banks won’t lend money on collateral that isn’t transferred in title under your name. For instance, you wouldn’t be able to get a real estate loan on a house in the estate because you don not actually own the home until probate is finished and final distribution occurs. Most real estate loans are made using the title as collateral. You have no equity in the house because it doesn’t belong to you until probate finishes but there are other financial tools that can be used to obtain money immediately. One of those tools is an inheritance cash advance.
Structure of an estate loan
Certain standards have been established for estate loans. The structure of estate loans is similar to that of receiving a mortgage on an inherited property. An estate loan can be hard to receive for the following reasons:
- The loan must be backed by an asset and the estate is not technically yours until probate is concluded.
- Lenders go through very thorough credit checks
- Lenders check criminal history
- Lenders check employment history before tendering the estate loan.
- If you do not meet the requirements for an estate loan, there are other options like a probate advance.
An estate loan is different than a probate advance
An estate loan is different than a probate advance which is a typical cash advance that is provided in exchange for the future distribution that will come when the probate is concluded. An estate loan is a commercial loan that requires credit checks and assets to back the loan. A probate advance is a funding tool that makes it easier to receive money quickly and easily during probate.
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Estate Loan Frequently Asked Questions
Rates on estate loans many times vary but they last for the duration of the probate matter. As an example: If an estate loan is 15% annually and the probate takes 3 years to close, then the loan will ultimately cost 45% of the money that is lent. For instance, if you receive $20,000, the loan would cost around $10,000, meaning the beneficiary would need to pay back $30,000. A probate advance cost does not have as many variables because the amount of money is agreed upon up front without interest fees that accrue every month. The agreed-upon terms are exactly what they will cost. There is no accrual of interest payments with an estate advance. Probate loan rates vary based upon multiple factors.
When it comes to estate loans, there are predefined ways that you have to use the money. You may or may not be able to use a loan to pay for inheritance or estate taxes. A probate advance can be used however you want. Inheritance taxes is a good use of estate advance proceeds.
Is an estate loan right for you?
At Inheritance Advanced, we provide inheritance advances rather than loans because they are easier to secure and better for heirs and beneficiaries. If you need to pay bills and need money for things like funeral costs a cash advance is a great option. You can use the proceeds however you want.
You do not have to worry about your credit score and the difficult probate process, or estate lending process for that matter. We don’t even look at it when applying, and we never dictate what or how much money you can use the way some other companies do – there’s always something in our budget for whatever your heart desires! After all, the inheritance belongs to you. Many estate heirs and executors find themselves in a position where they need money right away and estate loans aren’t an option for them. A probate advance is one option to receive funding that enables you to get your inheritance faster, but with the downside of receiving less once it’s over. We’ve helped 1,500 people from all around the country who needed their money sooner than later because we understand how difficult waiting for funds can be on an individual.