BankRate.com By Mia Taylor
August 27th, 2024
Often, when a family member passes away, their relatives inherit a home and the mortgage that goes along with it. This can be a confusing and even stressful situation that raises many concerns. Does the mortgage still need to be repaid? What if the home is underwater? And what happens if there is no will in place?
Key Takeaways:
- A deceased person’s mortgage becomes the responsibility of the person inheriting the home.
- The heir has several options, such as moving into the home and assuming the mortgage, buying out other heirs if they also inherited a portion of the property, or selling the house and using the proceeds to pay off the mortgage.
- Even if they plan to sell the home, the heir usually needs to continue making mortgage payments, but they should contact the lender to understand their obligations and the correct procedures.
We’ll explore what happens when you inherit a mortgaged home, your options (buy, sell or rent) and how special circumstances, like a home with a reverse mortgage, can affect those options.
Your choices to handle an inherited home —and any associated debt— range from selling the home to taking over the mortgage payments yourself. Each choice comes with its own set of financial considerations.
Mia Taylor
Before making a decision about what to do with the home, review the mortgage terms. Understanding its parameters can help you decide what to do with the home. As you review mortgage documents, zero in on the outstanding balance, the size of the monthly mortgage payment, the mortgage’s interest rate and whether it’s a fixed or variable rate.
