My dad passed away two months ago. I’ve been living in his house for the past few years. My wife and I were there to help take care of him. My wife also passed away unexpectedly. Now I don’t know what to do about the mortgage. I have no place else to live, and I’m on disability. I’m afraid to tell the finance company that he passed away, so I’ve just been making the payment. Is there any way I can get the mortgage in my name? — James .
Hello James. I’m very sorry for your loss. I have no idea what it’s like to lose a parent and a spouse so quickly, and maintaining your house should be your last concern at this time.
Fortunately, federal law does provide heirs protection when a deceased loved one’s home has a mortgage. You may be able to assume the mortgage on your father’s home if you meet some requirements. Even with a lower income, you might be able to qualify for a mortgage on your own, even though taking out the mortgage might be your best option. You can compare mortgage rates from multiple lenders by using Credible.
The death of a loved one is always a difficult time, and it can be even more complicated if they owned a home with a mortgage. You may be wondering if you can keep the mortgage in their name, or if you’ll need to take over the payments yourself
The answer is: it depends. There are a few factors that will determine whether or not you can keep the mortgage in the deceased person’s name.
- The type of mortgage: If the mortgage is a conventional mortgage, then it is likely that the lender will require you to take over the payments. This is because conventional mortgages typically have a due-on-sale clause, which means that the loan must be paid off if the property is transferred to a new owner.
- The terms of the will: If the deceased person had a will, it may specify who should inherit the property and the mortgage. If the will names you as the beneficiary, then you may be able to keep the mortgage in the deceased person’s name. However, you will still need to get the lender’s approval.
- Your financial situation: Even if the lender allows you to keep the mortgage in the deceased person’s name, you will need to make sure that you can afford the payments. If you are not sure whether you can afford the payments, you may want to consider selling the property or refinancing the mortgage.
Here are some additional things to keep in mind:
- If you do decide to keep the mortgage in the deceased person’s name, you will need to provide the lender with a copy of the death certificate and a letter of administration or probate.
- You may also need to provide the lender with financial information, such as your income and assets.
- The lender may require you to make a larger down payment or to get a co-signer on the loan.
If you are unsure about what to do, it is best to speak with an attorney or financial advisor They can help you understand your options and make the best decision for your situation
What Happens to a Mortgage When Someone Dies?
When a homeowner dies, the responsibility for the mortgage typically falls to the beneficiaries of the estate. However, there are a few exceptions to this rule. If the mortgage is a joint mortgage, then the surviving co-borrower will be responsible for the payments. If the mortgage is a reverse mortgage, then the loan amount will become due and payable upon the death of the borrower.
In most cases, the beneficiaries of the estate will have the option of either assuming the mortgage or selling the property. If they choose to assume the mortgage, they will need to get the lender’s approval. The lender will typically require the beneficiaries to provide financial information, such as their income and assets. They may also require the beneficiaries to make a larger down payment or to get a co-signer on the loan.
If the beneficiaries choose to sell the property, they will need to pay off the mortgage from the proceeds of the sale. If the property sells for less than the amount of the mortgage, the beneficiaries may be responsible for the difference.
Inheriting a House with a Mortgage
If you inherit a house with a mortgage, you will have several options. You can assume the mortgage, sell the house, or let the house go into foreclosure.
If you choose to assume the mortgage, you will be responsible for making the monthly payments. You will also be responsible for any property taxes and insurance. If you can’t afford the payments, you may be able to modify the loan or refinance it.
If you choose to sell the house, you will need to pay off the mortgage from the proceeds of the sale. If the house sells for less than the amount of the mortgage, you may be responsible for the difference.
If you choose to let the house go into foreclosure, the lender will take possession of the property and sell it at auction. You will be responsible for any deficiency judgment, which is the difference between the amount of the mortgage and the sale price of the house.
The death of a loved one is a difficult time, and it can be even more complicated if they owned a home with a mortgage. There are a few factors that will determine whether or not you can keep the mortgage in the deceased person’s name. If you are unsure about what to do, it is best to speak with an attorney or financial advisor. They can help you understand your options and make the best decision for your situation.
What happens to a mortgage when the borrower dies?
Mortgages typically can’t be transferred from one person to another. The borrower is responsible for repaying their home loan until they sell the property. Then the new owner must secure financing on their own.
But federal law makes allowances in cases where the primary borrower passes away. Here’s what can happen:
- A mortgage cosigner becomes responsible for repayment.
- The mortgage may be paid off by the estate executor selling the property.
- If an heir desires to remain the owner of the property, they can ask the lender to take over the mortgage and transfer ownership to them. (Note, however, that an heir is never obliged to take over a family member’s mortgage who has passed away. ).
The ease of taking over your father’s mortgage is contingent upon your status as a legitimate heir and the existence of co-borrowers. You will need to come to an agreement regarding whether you can assume the mortgage and maintain the property if there are other heirs to your father’s estate.
However, assuming the mortgage should be simple if you are the only heir and there isn’t a cosigner on the loan.
Assuming ownership of a property
To assume your father’s mortgage, you must secure ownership of the property. First, your father’s estate may have to go through probate, depending on the state where he lived.
Probate is a court-guided process that transfers property from a deceased person to their heirs. According to the last will, the court assesses a deceased person’s assets, pays off their debts, and distributes any remaining assets to heirs. If your father didn’t leave a will, the courts decide how to distribute his assets.
Once you have ownership of the home, you can ask the lender about assuming your father’s mortgage.
James, you say you continued paying the mortgage after your father’s death, which was wise. By keeping the mortgage current, you reduced your risk of foreclosure and proved that you could continue to make the payments even on a disability income.
Inform the lender that you inherited your father’s house after you have obtained ownership of the property. They can walk you through the process of assuming the mortgage. They might ask you to show documentation of your father’s passing and proving you are the property’s legitimate owner.
Also, you’ll need to purchase homeowners insurance in your name as required by the mortgage lender. You may be able to contact the existing home insurer and have your father’s policy transferred to you. Alternately, you can get quotes from several providers for new homeowners insurance and switch to a different one as desired.
To preserve their current status in the interim, it’s a good idea to continue paying the mortgage and homeowners insurance until everything is official. Speak with an expert estate attorney if you have any questions or need assistance with the mortgage assumption procedure.
If you decide to refinance after taking on the mortgage, you can compare mortgage refinance rates from various lenders by visiting Credible.
What Happens to a Mortgage When Someone Dies
FAQ
How long can a mortgage stay in a deceased person’s name?
Can a family member take over a mortgage after death?
What if my partner dies and the mortgage was in their name only?
Can you inherit a house that still has a mortgage?
Can a mortgage stay in a deceased person’s name?
When a person dies, their mortgage doesn’t automatically disappear. Instead, the mortgage remains attached to the property. So, yes, a mortgage can stay in a deceased person’s name temporarily. Upon death, the lender is typically informed. They may require the heirs to refinance or take out a new loan, especially if they want to keep the property.
Can a house stay in a deceased person’s name?
The general rule is that a mortgage may not stay in a deceased person’s name, however exceptions may apply. Generally, if a person dies, the title will transfer. If the title transfers, it invokes a due-on-sale clause.
What happens if a person dies on a mortgage?
Generally, if a person dies, the title will transfer. If the title transfers, it invokes a due-on-sale clause. “Due-on-sale” clauses can be fought with certain exemptions under federal law, including when property transfers to a spouse or child of the borrower on their death and the mortgage was on the family home.
Can a mortgage be paid off if a deceased person dies?
If you’re the executor, continue making mortgage payments using estate funds until the property is transferred to the inheritors. Thanks to the Garn-St. Germain Act, if the inheritor is a relative of the deceased person, the lender can’t force the inheritor to pay off the entire mortgage right away.