Personal Finance
November 12, 2015

What to do When You Inherit a Mortgage

Simple. Thrifty. Living.

Inheriting a home is often a blessing, but it can also be confusing or feel like a burden. If you’ve received property that carries a mortgage, you may be unsure of your obligations. They depend on the mortgage of the person who left you the property as well as your relationship to the deceased. Whatever your situation, the property might have back taxes and/or liens. It’s possible that the deceased person’s estate made provisions for these issues, but if not, talk with an attorney or financial planner about your best move.

If you jointly held the title to a property with no more than four dwelling units, you have the right to completely take over the mortgage as long as you are a spouse or close relative of the deceased person. If you weren’t related to the person, the lender might enforce the due-on-sale clause if there is one. Usually, though, you can keep the property as long as you show ability to make the payments.

When a lender decides to enforce a due-on-sale clause, that lender must provide you with notice of the accelerated loan and give you at least 30 days to meet the terms. If you can’t pay off the balance or can’t sell the property, you face foreclosure.

You will never be forced to take legal possession of property you inherited. If you don’t want the property, let the lender know, and the foreclosure will be attributed to the deceased person’s estate.

If you inherit a property that is under a reverse mortgage and want to keep the home, you’ll need to repay the amount that the deceased owner advanced. If you can’t afford the repayment, try getting a new mortgage.

As you can see, what to do when you inherit a mortgage isn’t black and white. Furthermore, in the chaos that sometimes accompanies a death, it’s easy to forget about monthly payments. If you want to keep the property, bring the payments up to date if they’re behind. As soon as possible, communicate with the mortgage lender about your intentions.

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