If you're like most people who've just inherited a house, you're probably struggling to decide what to do with the asset. Given the dismal state of the current housing market, it may be tempting to hold onto the property for a few years to give house prices a chance to recover, while potentially taking advantage of escalating rent prices in the meantime. Before you can justify taking this approach, however, you'll need to have a clear idea of what it will cost to keep the home. Here are the items you should include in your calculation:
If there's an outstanding mortgage on the house you've inherited, you'll obviously need to factor the monthly payment into the cost of holding onto the house. If you plan to rent the house out, you'll likely need to refinance the mortgage in your own name, so factor in the closing costs.
Stephanie Christensen of Mint.com recommends setting aside 1-2% of your home's value per year to put toward maintenance costs. If your house is worth $350,000, this would mean putting aside $3,500-7,500 per year, or roughly $300-600 per month. If you're unsure about the condition of the home's major systems, and fear major repairs in your future, hire a professional property inspector to pinpoint any issues that could require costly fixes.
If you're shopping for a new homeowner's policy and curious about how much you should expect to pay, you can visit your state's Department of Insurance to look up average rates in your county. If you're thinking of renting the house out, you'll also need to purchase landlord insurance to protect yourself from the potential liabilities involved in having someone else occupy your home and from property damage caused by the tenant.
If the home you inherited is part of a homeowner's association, you'll need to set aside money for the monthly dues. HOA fees vary widely, but it's not unusual for condo fees to run $300-500 per month. For a single family home, association fees are typically less costly, but this depends on the community amenities they're intended to maintain.
When you inherit a house, the property taxes will be reassessed to bring them in line with the current market value of the home. Many states include property tax calculators or estimate tools on their web sites. At the very least, you should be able to use your state's site to find information on how residential property taxes are calculated in your area, which will allow you to make a ballpark calculation of what you'll owe.