California Probate Loans
for Heirs and Executors

Probate Loans Against an Estate

The assets from an estate cannot be distributed to heirs until after the probate process is completed. Probate can last anywhere from 6 months to 3 years. During this lengthy process, heirs may find themselves in a situation in which they need probate funding. Probate loan solutions allow an heir or probate administrator to borrow against real estate within an estate until the probate can be settled. Borrowing against the real estate within an estate is often a lower-cost option than cash advance probate lenders who provide funds to heirs and then set a larger dollar amount that the lender collects upon close of the probate estate.

Estate Loans – Not Available from Conventional Lenders

Conventional lenders such as banks and credit unions are generally not able to provide estate loan solutions. A bank will not provide a loan to a individual who is not current on title of the property. These types of loans also require additional documentation and legal knowledge which most banks and credit unions do not possess. Conventional lenders cannot make a loan directly to an estate and then have another party immediately assume the loan.

Experienced estate and probate loan lenders such as North Coast Financial have the expertise and flexibility to the make the loan to the estate directly and then allow the heir to assume the loan and take title to the property.

Probate & Estate Loans for Attorneys & Fiduciaries

North Coast Financial works directly with attorneys and fiduciaries who need to borrow against real estate on behalf of a client’s estate or trust. We assist administrators, trustees, and executors in need of fast funding for short-term loans against an estate or trust. The borrowed funds can used to pay attorney fees, pay off other heirs and siblings, pay taxes, settle debts or handle any other obligations of the trust or estate. A probate attorney, administrator, executor, trustee or beneficiary is able to initiate the request to obtain the probate or estate loan.

How to Refinance an Inherited Property to Buy Out Heirs

When heirs inherit property a problem frequently arises when one heir wants to maintain ownership while other heirs wish to sell their interest in the inherited property for cash. The heir who wants to keep the property may not have enough cash to simply pay off the other heirs (siblings) so they must pursue an option for refinancing the inherited property. A home equity loan on inherited property from a hard money lender is often the fastest and easiest solution to raise cash in order to buy out siblings of their interest in an inherited home.

Refinancing inherited property typically cannot be done by a traditional lender such as a bank or credit union. The title to the inherited property is often in the name of the trust or estate. Because the title of the property is not in the borrower’s name, getting a mortgage on an inherited property from a bank will be extremely difficult or impossible. Banks generally aren’t interested in refinancing a property with multiple heirs.

The solution to this problem is working with a hard money lender who understands how to refinance an inherited property to buy out heirs. Prior to refinancing the inherited property, the heirs must agree on the value of the inherited property and determine the amount of cash each heir will receive for their buy out.

Experienced direct hard money lenders such as North Coast Financial have the ability to provide heirs with a home equity loan on inherited property (real estate). These loans have numerous different names such as probate loans, probate estate loans, probate real estate loans, estate loans, trust loans, estate inheritance loans, inheritance loans and inheritance property refinance loans. These loan types all provide the heirs with a cash out refinance on inherited property.

Hard money lenders are able to refinance inherited property as they can make the loan directly to the trust or estate and have the borrower (heir) assume the loan. The loan proceeds are distributed to the heirs receiving the buy out for selling their share of the inherited property.

When the refinance of the inherited property is complete, the borrower/owner will be able to transfer title of the property into their name and apply for a bank loan to obtain a lower interest rate and longer loan term.

READ MORE: How to Refinance an Inherited Property to Buy Out Heirs

Inherited House with No Mortgage vs Inherited Property with an Existing Mortgage

Inheriting a house with no mortgage is the ideal situation as it provides larger equity distributions for the heirs. In a situation where the heirs have inherited property with an existing mortgage, the existing mortgage will need to be paid off, unless the heirs only are only in need of a small 2nd loan behind the 1st. The amount of equity available to the heirs will be reduced by the current balance of the existing loan.

Probate Loan Interest Rates – Estate Loan Interest Rates & Fees

Estate and probate loan interest rates and fees will vary from lender to lender. The structure of the rates and fees may also be drastically different based on the type of lender. Hard money lenders are only able to provide loans against real estate within the estate. Common probate loan interest rates from hard money lenders can range from 9.95-11.95% interest with 1.5-2 points. While the interest rate may seem high compared to conventional real estate loans, these are short-term loans and many borrowers only make a few payments prior to refinancing. For heirs who are obtaining an estate loan in order to avoid a tax value reassessment, the total loan costs will be minuscule compared to the thousands of dollars the heir can save each year in the form of lower property taxes.

Other types of inheritance lenders are able to provide an inheritance advance to the beneficiary/heir in the form of a cash advance assignment. These lenders can provide an inheritance advance against any assets within an estate, not just real estate. In exchange, the heir must assign a portion of their anticipated inheritance to the inheritance lending company. This type of inheritance can be very expensive with fees in the range of 10-40% of the inheritance value.

Reverse Mortgage Refinancing for Heirs

North Coast Financial is also also to provide reverse mortgage refinancing to heirs who wish to maintain ownership of a inherited property that has an existing reverse mortgage. Conventional lenders will not refinance reverse mortgages for heirs but direct hard money lenders can provide this type of funding. A loan can be made to the estate which can then be assumed by the heirs. This allows for the heirs to maintain ownership of the property, have the title of the property transfer into the heir’s name and prevent a reassessment of the property value which can save thousands of dollars in property taxes each year (consult a tax professional or attorney).

Choosing a Reputable California Probate Loan Lender

Probate lending is a specialized niche, and not every lender that advertises it handles these loans the same way. Because a probate loan involves an estate, a court process, and often multiple heirs, choosing an experienced and transparent lender matters more than it would for an ordinary loan. A few key distinctions help separate a reputable probate lender from the rest.

Direct Probate Lender vs Broker

The first thing to determine is whether a company is a direct probate lender or a broker. A direct lender uses its own funds to make the loan, so it approves the loan and provides the money. A broker arranges the loan through an outside source, adding a layer to the transaction and, in some cases, an additional fee.

For probate loans, working with a direct lender often means faster answers and faster funding, because the party you are speaking with makes the decision and controls the money. This can be important when an estate has a deadline, such as preventing a foreclosure (especially a reverse mortgage), paying estate expenses, or funding a beneficiary buyout on a schedule set by the court or the other heirs. When evaluating a company, it is reasonable to ask directly whether it lends its own funds or brokers the loan elsewhere.

Questions to Ask a Probate Lending Company

A short list of specific questions quickly reveals how experienced and transparent a probate lender is. It is also worth asking about cost and timing in plain terms. Useful questions include:

• How many probate and estate loans have you funded, and do you lend throughout California?
• Do you lend directly to the estate?
• What loan-to-value will you lend against the estate’s real estate?
• What is the interest rate, how many points do you charge, and what third-party fees should I expect?
• How quickly can you fund, and how is the loan repaid when the estate closes?

A reputable probate lending company should be able to answer these clearly, explain how the loan works alongside the probate process, and provide specific figures rather than vague estimates. Evasive answers or pressure to commit without documentation are reasons to keep looking.

Contact North Coast Financial Today

North Coast Financial provides estate, trust and probate loan solutions in Southern California, Northern California and Central California. We specialize in the areas of Los Angeles, Orange County, San Diego, Riverside, San Bernardino, Ventura, San Francisco Bay Area, Sacramento and other counties throughout California.

Contact North Coast Financial now and have your probate, estate, trust loan or inheritance advance funded quickly.

Probate & Estate Loan Frequently Asked Questions

What estate, probate or trust loan financing options are available for beneficiaries?

For estates, probates or trusts that contain California real estate, beneficiaries may borrow up to 65-75% of the current value of the property. These short-term loans are generally available for terms of up to 1-3 years.

Can a beneficiary borrow from a trust?

A beneficiary may borrow from a trust if the trust agreement permits the trustee to loan money. The trustee must consider the beneficiary’s ability to repay the loan. If it appears that the beneficiary will not be able to repay the loan it may be seen as distribution.

Can I buy out my siblings in an inherited home?

Buying out siblings from an inherited home is the most common reason for obtaining an inheritance loan. The loan is made directly to the trust or estate and secured by the inherited home. The loan proceeds go directly to the bank account of the trust or estate and can then be distributed to the siblings. Once the siblings no longer have an interest in the inherited home, the title of the property can transfer from the name of the trust or estate into the name of the sibling who is keeping the property. Once title has transferred, the owner can then approach a bank for long-term financing in order to refinance the short-term inheritance loan.

Will an estate loan allow for an exclusion from reassessment with a Parent to Child transfer or Grandparent to Grandchild transfer?

This is a common reason beneficiaries choose to obtain an estate loan from a hard money lender. Preserving the existing property assessment value can potentially save the beneficiary thousands of dollars in property taxes each year going forward.

Title of the property can transfer from the estate to the beneficiary who intends to hold title and cash is distributed to the beneficiary(s) who wish to transfer their interest in the property to the other beneficiary(s). This process can allow for a proper transfer of title from Parent to Child (or Grandparent to Grandchild) which can exclude a reassessment. Prior to taking such action it is advised that the borrower consult with an attorney or CPA to verify that the Parent to Child property tax exclusion will apply to their specific circumstances.

More information on transfers between parent and child (Proposition 58) and grandparent and grandchild (Proposition 193)

Can a beneficiary still receive an estate loan if the property has a reverse mortgage?

North Coast Financial can help heirs refinance a reverse mortgage.

The reverse mortgage would have to be refinanced. If the property has enough equity, a larger loan amount beyond the current balance of the reverse mortgage can be considered in order to provide the beneficiary with cash out.

Who is permitted to borrow against real estate within an estate or trust?

Trustees and beneficiaries may be permitted to borrow against real estate in the trust or estate. The estate or trust must allow for borrowing against its assets. The trustee, successor trustee, estate administrator or executor must allow for the loan to take place.

All beneficiaries of the estate or trust must also provide their consent for the loan to be taken out.

What is necessary to qualify for a California estate or trust loan?

Besides having the legal authority and permission from other parties related to the estate/trust, the beneficiary must also qualify for the loan by filling out a standard loan application.

While the primary focus of the loan approval is on the value of real estate being used as collateral, the beneficiary must demonstrate that they have the financial ability to make the necessary monthly loan payments while the loan is outstanding.

The application requires information such as the beneficiary’s income and existing assets and debts. The beneficiary’s credit may be considered but likely will not prevent the loan from being approved, even if they currently have poor credit.

Will a bank or credit union provide a beneficiary with an estate, probate or trust loan with real estate as collateral?

Banks, credit unions and traditional mortgage companies are generally not able to provide estate, probate or trust loans as these types of loans are often considered too risky and do not fall within their strict guidelines. These types of traditional lenders are typically not able to provide a loan to an individual when the title to the property is not in their name.

Private money lenders with experience funding these specialized types of loans are able to make the loan directly to the trust or estate and then have the beneficiary assume and personally guarantee the loan.

Are beneficiaries with bad credit scores able to qualify for estate, probate, or trust loans?

Beneficiaries with poor credit, bad credit or other financial issues can still receive an estate or trust loan from a hard money lender. Hard money lenders are primarily concerned with the value of the real estate.

How long does it take to receive funds when receiving an estate, probate or trust loan?

It generally takes 1-2 weeks for the loan to be funded and the beneficiary to receive their funds. This is assuming there are no major title issues with the property and all disclosures and documents are signed and returned by the beneficiary in a timely manner. In certain situations the closing could take longer due to federal regulations and potential issues with the borrower’s title to the property.