When a loved one dies, you already have plenty of other things you need to worry about. But if a loved ones leaves you to inherit a house as a part of their estate, there are a few steps you need to take and things you need to be aware of if you want to make sure this transaction is done properly and that the home is taken care of.
If the original homeowner dies before the mortgage is paid off, the mortgage does pass to the inheritor. You have a few options when it comes to dealing with that mortgage, but before you worrying about how you are going to pay it, there are few other things that need to be taken care of.
Who Really Owns the Property?
If there was a cosigner on the mortgage, that person is actually going to be responsible for paying off the mortgage when the owner passes. If there is no cosigner, the mortgage may pass to the homeowner’s spouse. In some specific instances, the lender may actually take possession of the property and try to sell it in order to make the money they loaned to the deceased back. Whether or not this is an option depends on your specific situation and the state where the property is located.
The very first thing to do when you inherit a house is to contact the lender. In order to confirm the transfer of responsibility to you, they will likely want to see a death certificate and the will, in order to make sure that you are actually legally allowed to inherit the house. They will probably ask to see this information even before they tell you how much of the mortgage is left to pay.
If you have the money on hand, you could just pay off the rest of the mortgage. You could then live in the house, rent it to someone else, sell it, etc., without having to worry about the mortgage on top of everything else. In some circumstances, if you also inherit funds from the estate, you might be able to put them towards that mortgage.
Other options include continuing to pay the mortgage or selling the house once it has legally become yours.