My fiancé and his siblings inherited a property (single family home that needs repairs) and it has been stuck in probate for three and a half years. The property is paid off and should be worth around 520k, but is in a state of disrepair and would be valued significantly lower in its current state. The executor of the will / estate is my fiancé’s brother, also a beneficiary of the estate. His brother has been dragging his feet and isn’t taking any action, and the other two siblings are unresponsive, so my fiancé wants to just buy them out.
After a little digging online, it looks like the only way to buy out the siblings without our own cash would be to do a cash-out refinance. But my fiancé has credit in the 500’s and since we aren’t married yet, I don’t think I can help him there.
Are there lenders that will do the refinance or HELOC to buy out the siblings so that we can fix the property and then sell it? The siblings don't want anything to do with this and they would rather sell the house in its current state and inherit less money than to fix it and get a little more. It makes sense to just buy them out and get them out of the way, but is it even possible without our own cash?
Are there any institutions that do cash out refinance or HELOC to heirs / estates? Considering that the final plan is still to sell the house and not use it as a residence, would the credit score bar him from going this route? Should he talk to a mortgage broker or an institution?
Any advice is welcome. The house was appraised at around $360k in its starting state, $535k remodeled. We did spend several thousand dollars to repair since the first appraisal. This is mostly just due to some water damage in the basement. Siblings seem willing to cash out at under $360k, but my fiancé doesn’t want to lose part of his inheritance over a little water damage and paint. Problem is the executor is being difficult and we ran out of cash for repairs and still have about $15k of work left to go. We almost got a small inheritance loan to finish the repairs but the executor wants to be bought out and isn’t willing to wait or even compensate my fiancé for the loan from the final sale of the property. It’s kind of a mess and before I spend pages explaining it all, is there any option to refinance or any way to buy the siblings out?
The low credit score is going to make the process difficult to impossible. Maybe try getting a personal or home improvement loan? 0% credit card? To finish the renovations and sell, and pay the loan off.
@M Zadeh if your fiancee is willing to live in it for a year while doing the repairs/improvements, and/or if you're willing to partner with him. It might be possible to get a 203K loan (XX% down) or a Home Style Renovation Loan (3% Down, 620 Fico). You might want to review these forum posts in which replies discuss these options.
FHA scenario, meaning there will be mortgage insurance even if >20% equity. But the 500-599 FICO is not an automatic total deal breaker. Call a local mortgage broker. Expect a slow process; all those things leading to a FICO in the 500s will need to be worked through, and the lenders going down that low aren't necessarily the fastest and most efficient.
This is a really good candidate for a hard money loan with you (assuming your credit is better than the fiance's) as the majority holder of the LLC and the fiance as a very limited (<20%) partner. Get a loan that covers the repairs and then fix up the house once you're the ones alone on title and then sell it for a profit. If you want to keep it, then get long term financing. I don't think you have an FHA alternative. Many lenders say they will go down that low, but when it really gets down to it, something precludes them from closing.
Thanks to everyone. I’m in the process of trying to secure a hard money loan. I didn’t know it was an option until I got advice here on BP. I don’t have it yet but I am working towards getting it. Will update once things start rolling.