Probate – Any loan that is funded is not the obligation of any of the beneficiaries, but may become a liability of them if at such time they inherit a property that is secured by a probate loan. However many probate loans are often structured to have the loan paid off prior to the distribution of the asset to the final beneficiary.
When an application for a loan is made it is typically extended to the probate estate under authority of the executor or administrator as part of their appointed duties. The normal procedure is for the executor or administrator of the estate to sign on behalf of the estate. The party signing is not personally liable as they are only signing in the course of their designated responsibility.
When applying for a loan value is everything. So it is requirement that there be adequate equity in any real estate offered as security for a probate loan. As such equity is everything when it comes to obtaining a loan.
It is very common for people to die with free and clear property or properties that have very small mortgages and thus have substantial amounts of equity. Beneficiaries designated to inherit real estate can take comfort in the fact that if time and money is an issue then taking advantage of a loan to get the money now just might make life a little easier.
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