“I Inherited A House In Chattanooga That Has A Mortgage. What Do I do?”

For more information about what to do when you inherit a home that still has a mortgage, see our guide below.

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Inheriting A House With A Mortgage In Chattanooga


Disclaimer: The information on this page is intended for general informational purposes only and is not to be used as a substitute for professional legal advice. New Horizon Home Buyers is a local home buying company that can purchase inherited homes in cash even if they have a mortgage or liens.


Can I Take Over The Mortgage On An Inherited House In Tennessee?

Many times, the heir(s) are able to take over the mortgage if desired. Usually, when a property is transferred from one person to another, it triggers what is called a “due-on-sale” provision which accelerates the loan balance, and the entire loan must be repaid in full. However, in the case of a property transfer to a relative when the owner dies, there is a federal law that establishes a legal basis for the heir to assume the mortgage without triggering this “due-on-sale” provision.  It is the Garn-St. Germain Depository Institutions Act of 1982

For example, if a parent leaves a home to their child upon their death, that heir will be able to take over ownership and assume the loan.  In this case, the lending institution cannot use the “due-on-sale” provision to accelerate the loan and demand full repayment. Of course, the heir will be responsible for continuing to pay the regular monthly mortgage payments. 

Further protection for heirs wanting to take over the mortgage of an inherited home comes from a rule issued by the Consumer Financial Protection Bureau.  This allows heirs to be added to the loan as a borrower without activating the “ability-to-pay” rule This rule usually requires lenders to collect credit report data and financial statements to make sure the borrower can afford to pay the loan before allowing them to be added as a borrower on the note.  

Do I Have To Fix Up Or Clean My Inherited Home In Chattanooga Before Selling?

Sell an inherited house that needs repairs

If you want to sell your inherited property in Chattanooga for the highest price, then yes you will need to put time and money into fixing it up and making it look perfect.  This will attract the most buyers and fetch top dollar on the MLS.  However, there are several factors to consider when doing this. 

  1. Do you have the time and money to make all the necessary updates and repairs? 
  2. Can you afford to continue paying the mortgage while making these improvements and waiting for it to sell on the MLS?  
  3. Selling with a realtor may get you the highest sales price but it may not get you the most money in your pocket when it’s all said and done. Don’t forget about closing costs and realtor fees.  

We offer a simpler, faster, easier way to sell your inherited home in Chattanooga without all the time, cost, and hassle of fixing it up.  Here are the benefits of selling to New Horizon.

  • We buy 100% As-Is.  No need to fix or clean anything.  
  • We pay in cash.  No need to wait on banks for financing.  
  • We pay all the closing costs. The whole process is TOTALLY FREE for you.  
  • We can close FAST! 

Selling your inherited property in Chattanooga to someone who can close quickly is especially important if you are responsible for the mortgage payments.  We can close fast so you can pay off the mortgage and keep the profit. Faster closing = more profit for you.  Check out this side by side comparison of selling with a realtor vs. selling to New Horizon.  

Should I Keep My Inherited Property In Chattanooga As A Rental?

If keeping your inherited house as a rental is something you want to do, go for it!  We are real estate investors and we have rentals ourselves.  It can be a great way to generate income, however, before you decide to become a landlord you need to be prepared.  

  1. Does the property need repairs or updates to rent at the current market rate?  If not, you will need to invest time and money to get it ready to rent.
  2. Are you going to manage the property yourself or hire a property manager? Managing a rental property is not passive and requires knowledge and skills.  If you don’t have any experience, a property manager can be very helpful but they aren’t cheap.  Most charge around 10% plus a placement fee in addition to upcharging any repairs or maintenance issues.  Third, do you know the landlord/tenant laws for your area and do you know how to navigate the eviction process should you have to do so?  
  3. Do you have a cash reserve to be able to cover large expenses such as a new roof, appliances, HVAC, etc.?  An unexpected expense can turn a great rental property upside down and you need to have a plan in place. You also need to be able to cover the mortgage yourself if it becomes vacant for a few months.  

If you can answer all these questions and feel good about renting out your inherited property, great! If it seems like too much hassle and you just want to sell, let us give you a CASH OFFER to buy your inherited property 100% As-Is, at no cost to you.  

What If There Are Other Liens On The Inherited House Besides The Mortgage?

In most situations, when someone inherits a property, the liens on that property are now the responsibility of the new owner.  Depending on the lien, the property can even be foreclosed on to pay the amount owed.  If you are unable to pay off any additional liens on the property, you should consider selling the home in order to pay them and clear the debt. You can of course keep the difference after paying off any liens. 

Allowing a property to go to foreclosure is rarely a good option so be sure to take care of all debt associated with your inherited property before it’s too late.  If you want to sell your inherited home for cash to New Horizon Home Buyers, we will make sure any liens against the property are taken care of during the closing process.  

What If I Live Out Of State From My Inherited Home In Tennessee?

You can do any of the options above whether you live in the same state as the inherited house or not.  It just may be a little more difficult to navigate everything from far away.  At New Horizon, we can buy houses from people without ever meeting face to face.  We take care of everything from the offer, paperwork, closing, and getting you a check.  We make it simple and easy.  You don’t have to figure it out on your own.  We will walk you through every step of the process.  

New Horizon Home Buyers Bossier City LA Google Reviews

“Erik and Jessie were really easy to work with. They were fair and honest negotiating the deal and made the whole process simple! Highly recommend New Horizon!”

New Horizon Home Buyers Customer Review Micah Brant

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