Various financial companies offer cash advances at different costs. They generally charge a fee instead of an interest rate. The fee is based on several factors, including the risk involved, the creditors involved for the estate, how many heirs will be dividing the property and how long it is expected to take to close the estate. It is like an origination fee for other loan types. It is important to know the fee usually comes out of the inheritance, and you do not need to pay this upfront. This is one reason that a cash advance is more affordable than more expensive financial options when you need money. You are basically selling inheritance property, so you want to get a good deal. At the same time, you should be cautious in avoiding an inheritance scam.
Important Considerations for a Cash Advance
When considering a cash advance on your inheritance, you must compare costs between companies. You want to find the company with the lowest cost. Of course, a lower fee is not the only consideration, but it is an important one. You also want to find out what the minimum inheritance must be to qualify for an advance. Many companies require your portion of the inheritance to be at least $15,000, but each company is different.
You will also want to find out the maximum amount you can receive. It ount you are expected to get from the estate. This is similar to a LTV or loan-to-value ratio on other loans. For example, a company may provide funds up to 50 percent or even 75 percent or higher of the inheritance while others will cap it out at 25 or 30 percent. Often, there will be a maximum up to $50,000 or even $250,000, but it can vary by finance company so ask about the bottom line when you apply if there’s a certain amount you need to get.
Make sure you know the terms of the advance before you sign the documentation to accept the funds. With a cash advance, the company receives the repayment directly from the estate and there is no need to refinance. They file all the paperwork so you do not need to. Once the company receives their money, any balance left over is given to you. Find out if there is the option of prepayment and if you get a discount. Some companies will allow you to pay early or they may provide a discount if probate is settled earlier than expected.
With an estate loan, you must look for the best probate loan rates
You don’t need perfect credit or a high credit score or a certain income. Lenders base their decision off the inheritance rather than your financial history. You don’t even need equity in a property or other capital. Some finance companies won’t even check your credit report while others will review it for judgments against you that might affect your ability to receive the inheritance. Approval is often quick, so you get your money faster. The lender looks at the documents you provide about the inheritance and determines the fee for the funds. They may notify you in a day or two. Once they contact you to say you are approved, you often get the money in a matter of days instead of weeks. Even an estate loan can take longer for approval. You can use the money in any way it is needed. You are able to use it to pay bills, take a vacation, pay off an existing mortgage or other real property, make a large purchase or remodel your house among other uses. You do not have to pay back the money, so you are not the same as a borrower for one of the personal loan programs or even an estate loan. You are not responsible for making a balloon payment. The finance company will get the money from the inheritance when the funds are released. Terms are fixed when you sign the contract and cannot change. This option is non-recourse. It means that if something happens to the inheritance after you are approved and receive the money, you do not have to come up with the funds for repayment. The finance company is the one that loses out rather than you. This makes an estate advance a low risk while the finance company buys into your inheritance. However, you do not lose the rights to the rest of your inheritance once the estate is closed.