My mother left a home in a living trust. It has a mortgage rate of 6.25%??

Asked by alva, Seattle, WA Fri Jun 7, 2013

about 70K left to pay on a home worth about 100k. any advice? should i try to refinance and how difficult is it to sell.

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, ,
Fri Jun 14, 2013
As Kary mentioned, I would consult your trust papers to see if this action is even possible. If it is, you should go through a cost/benefit analysis. Is this a personal residence or income property? How long are you going to be in the house and how much is the refinance going to cost? Take your savings per month and divide into your closing costs. That is your break-even date in months. If you will live in the house longer than this break-even time frame, it makes sense to refinance. If you will be there shorter than that time frame, it may not make sense. There are also other factors to consider.

Concerning the living trust and the difficulty in selling, we can handle family trusts or loans in the name of a corporation, etc. Our legal department has to review the trust documents. As a seller, you should not have any difficulty in selling if it is in a trust name, perhaps more work for the escrow company.
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, ,
Fri Jun 7, 2013
It would depends on how many years left on the current loan and what term you are wanting to refi to. With rates so low, a 10 or 15 year term is certainly the way to go. But if you plan on selling the home in the future, I would not recommend refinancing the home.
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Dan Tabit, Agent, Issaquah, WA
Fri Jun 7, 2013
I would only suggest a refinance if you plan to keep the property. If you do, as Ray mentioned, be careful, a lower rate comes with fees that can offset the savings for a while. You may find that refinancing at a shorter term, like 10 or 15 years can get you both a lower rate and keep the payment pretty low too. I'd be surprised at any home in Seattle that's only worth $100k. It may be worth more than you think.
Selling would be something the greater market would like, there is a shortage of inventory everywhere but this is the last reason to consider doing it. Is the home something you would want to live in or rent out as an investment? Is it in need of updating or deferred maintenance?
As Kary mentioned, discuss what you are allowed to do with the home with an attorney, preferably the one who drafted the trust, so you can make well informed decisions from here.
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John Stewart, Agent, Seattle, WA
Fri Jun 7, 2013
Some mortgage holders will refinance with few or no visible fees. Ask the mortgage holder what they would charge.
This is a good question for the estate attorney who built the trust for your mother.
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Ray Akers, Agent, Seattle, WA
Fri Jun 7, 2013
Because of the low balance ($70,000) it may not make sense to re-finance to the current 4%. The cost of refinancing may outweigh the modest monthly savings. You can make additional principal payments. Just make one additional payment in a year, 13 payments instead of 12 payments, and you'll pay off the mortgage much quicker.

Selling the home is not a problem. Since the property is in a trust, you'll need the trustee's approval, however. Who is the trustee? Review the trust documents for guidance. You may want to consult with an attorney at this juncture. Good luck.
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Kary Krismer, Agent, Renton, WA
Fri Jun 7, 2013
I would suggest seeing a real estate attorney to review the situation regarding the property. It's possible that the trust wasn't set up property or that it should be dissolved for one reason or another. If this was a trust set up to avoid estate taxes (e.g. your mother had a large estate), then perhaps an estate planning attorney would be a better choice.
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