New Home in a Couldesac

Preparing financially and legally for your own death probably isn’t the most uplifting activity, but nonetheless, it’s an important task, especially if you have a spouse or dependents you want cared for when you’re gone.

Some of the most common considerations revolve around the process of designating a successor for the title of your home and making plans for what will happen with your mortgage upon your passing.

Because each state has different rules on how title transfers, either by will or probate, it’s important to talk to an attorney and determine your state’s laws and what you need to do based on the way you want your successor to hold title.

Who Assumes the Payment?

There are a few different people who could possibly inherit your title, depending on who you indicated in a legal will: a spouse (co-borrower), a co-signer or a designated beneficiary.

Should you have a surviving spouse, federal law allows them to take over the mortgage, rather than paying the full balance back to the mortgage company, assuming they’re able to provide proof of financial ability and credit-worthiness.

Should you leave your title to a successor, it’s important to remember that this individual only inherits the title of your home, not the mortgage. Until the inheritor goes through the assumption process, there is no personal obligation on that individual to make the loan payments. In other words, that individual’s credit isn’t linked to the payments needed to make the loan, so they aren’t legally bound to pay the existing loan amount.

The Difference Between an Heir and the Executor of an Estate

It should be noted that there’s a difference between an heir and the executor of an estate, because only one has the authority to make final decisions on an estate.

The heirs are those who may receive money under the will, but they don’t have power over the estate or the sale of assets. Usually these individuals are family members or someone the client had listed as beneficiaries in a will.

An executor is designated to administer the estate and make sure all claims are paid and that the remaining property goes to the heirs. Because of the power an executor holds, an executor can consult with heirs regarding the estate or sale of assets but isn’t obligated to do so. The executor has the ultimate authority to make final decisions concerning the estate.

Oftentimes when there is a larger family concerned, one heir, or a dependent of the client, will be made the executor, while any other dependents remain heirs. Should there be a dispute between the executor and heir(s), a judge can make a final decision on the estate.

The executor can choose whether to pay off the remaining mortgage balance by selling the home, dividing the money from the sale between the heirs, resuming payment of the loan in the deceased individual’s name, or refinance the mortgage into their own name.

Who Has Authority?

Perhaps the most important thing you need to do when making your plans is to get everything in writing.

By establishing a clear-cut will, you’ll ensure your home will pass to your designated relative or heir and that you have a designated executor who can be the ultimate decision maker. However, the decision maker still isn’t liable for the loan until they go through the assumption process.

For this reason, communication is key when determining who will become the executor of your estate. Be sure to have an open and honest conversation with your heir or beneficiary and to make your intentions known. It’s also helpful to make sure they know where and how to find your mortgage documentation.

Depending on what state you’re in, the inheritor may need to go to court for probate to ensure they’re appointed as the executor and have the right to make decisions on the estate.

Only one person can be named the executor. So if a deceased family member had multiple dependents or beneficiaries and no designated executor, the courts will try to ensure that each person is represented when considering the estate.

What Are the Options?

If upon your passing, no one has been designated to inherit the loan and no one pays, the lender will still need to collect the debt. Therefore, the lender usually ends up selling the home to recoup the debt. This means if someone intends to keep the home, they must continue to pay the mortgage.

It’s important to note that lenders don’t automatically require full repayment of the loan or initiate foreclosure upon a client’s passing. The client’s family is more than welcome to send in payments to keep the loan current and in good status.

The best thing to do upon the death of a family member is to first contact the servicer of the loan. Servicers typically require a death certificate and verification that you’re the inheritor of the house.

Talk to a Home Loan Expert Today

Quicken Loans offers various options to clients’ family members when they inherit a home.

For example, if a client dies and someone wants to pay the loan but doesn’t have the ability to do so, Quicken Loans can often offer loss mitigation modification options, completed in conjunction with an assumption, to put the loan in the heir’s name while working to make the payment more affordable to the heir.

Assumption options are also available to heirs who want to pay the loan’s current payment and have that payment reflected on their credit.

To elaborate, if the heirs want to assume the loan so that the payments they make will appear on their credit, they are entitled to do so without becoming financially responsible for the loan. Until an assumption takes place, no one is responsible to make payments on the home in the eyes of the lender or the credit bureaus. If a payment isn’t made, the home will go into default, and foreclosure could begin.

Talk It Out

There are a lot of factors that go into these types of preparations. It’s important to consider how your decisions today will affect your loved ones when you’re gone.

On top of your mortgage, consider any other debts that you may leave behind for your family upon your passing. Your own death often isn’t the most uplifting discussion topic, but talking about it now may give you and your loved ones some peace of mind in the future. So take a moment and consider what happens to your debts when you die and make time to openly and clearly explain your situation to your family members.

This Post Has 90 Comments

  1. Hello.
    My father recently passed away, he had a mortgage and ended up taking himself off title and put me on it.
    I now hold title and it read as “[My Name], a married man as his sole and separate property”.
    My father is now only tied to the mortgage. I’m making payments while I move his stuff out of the home.

    There was no will.
    There are no other next of kin (never married and I’m an only child).
    There are no liens on the home.

    The only debt he had was a credit card with Wells Fargo and I already closed it (Along with his checking account).
    He has a 401(K) and that is in process of getting paid out since I was added as a beneficiary on that account.

    I live in California and the property is located there too.
    One of his neighbors already offered to buy the property “AS IS”.
    I have ZERO desire to live there and I don’t want to put too much money into it since I don’t know if I can sell it after the upgrades plus the land/rent value in the area isn’t that high so this seems like a good idea to take the neighbor’s offer.

    *** QUESTIONS ***

    When it comes to renting out or selling the home will I have a problem (Since I’m on title but not the mortgage)?

    Do I need to make the lender aware of my father’s death? I’ve heard no because all they care about is the mortgage getting paid.

    I’ve heard of the whole probate thing but I thought that was mainly for way more complicated scenarios than this. Do I still need to go through that process, if yes, is that through the courts?

    Any help would be greatly appreciated.
    Thank you so much for your time.

    1. Hi Dominic:

      You’ll want to check your local laws, but in order to get the property officially awarded to you, you may have to go through probate. I’m not a lawyer, so I can’t comment on whether you would need to. That’s technically a court process, but I would imagine it would go smoothly because you’re the only surviving heir.

      You’ll want to make the lender aware if you sell the property because you’ll need a payoff statement. Additionally, if you rent out the property, you’ll need to get a different homeowners insurance policy to deal with rentals.

  2. My husband passed away 12/24/2017. I have been making the payments on the mortgage and my name is on the deed. However the mortgage was only in his name. I’ve been trying to refinance this loan but I’m told I don’t qualify. Makes no sense that I’m paying the loan, but don’t qualify. Anyway today I was told that this mortgage could not be assumed. Where in my paperwork from the original mortgage would I find that information? Oh and by the way Quicken Loans is the mortgage holder. No One seems to want to help me.

    1. Hi Patricia:

      I’m going to have someone reach out to you about this to go over your situation. Not every loan can be assumed, but I want to make sure we go over all of your options. You do have to qualify based on credit and income in order to actually assume a mortgage, but you’re allowed to keep making the payments. I can tell you that much for sure.

    1. Hi Bre:

      Quicken Loans and Rocket Mortgage are one and the same. Rocket Mortgage is an online mortgage process offering of Quicken Loans.

      In terms of your actual question, we don’t offer any insurance options ourselves, but you can get your mortgage paid off with a special mortgage life insurance policy. A lot of people will also use the proceeds from their general life insurance policy to pay off their mortgage. We don’t offer any specific recommendations, but you can shop around for quotes online. Hope this helps!

  3. Hello,
    My neighbor just passed away without a will, leaving her two elderly parents who had been living with her on her home. The mortgage is in her name only. Is there any way for them to go about getting the home in their name that would allow them to sell the home?
    Thank you

    1. Hi Ileana:

      The home will go through probate and assuming no one else is opposed to them having the home, they should be able to get the deed and all the appropriate records changed once they are awarded the home officially by the court. In the meantime, they just need to keep making the payments. Hope this helps!

  4. My brother passed away in 2006. He had a will and left all assets to my parents but his mortgage was not paid off. The will was probated and my father was assigned executor. He never contacted the mortgage company in fear of the unknown. He just makes the payments every month and has never gotten behind on the mortgage. It’s been so long, what happens when it’s time to sell the property?

    1. Hi Casey:

      Because your father is the executor, he has the authority to sell the property, if he chooses to. He can choose to pay off the remaining mortgage balance by selling the home, or he can just continue resuming payment in your brother’s name. He can also refinance the mortgage into his own name, if he chooses to, but this won’t effect his authority to sell the property. I hope this helps.

  5. Hello, my son’s father died a little over a year ago leaving a house with a mortgage. My son has been paying the mortgage since then and his father’s estate was just closed. The title will be changed to his name, but he wants credit for paying the monthly mortgage. What are his options?

    1. Hi Linda:

      If your son went through the mortgage assumption process, then his credit and other financial factors were reviewed to make sure he was able to assume the loan. This would mean that the payments would be tied to his credit for paying the monthly mortgage payments. My suggestion would be for you to contact the mortgage servicer of the loan and see how the payments were being received in regards to your son’s credit. My condolences to your family. I hope this helps!

  6. If you already have the title in your name of the property you inherit but it still has a mortgage. Under the new Consumer Federal Protection Bureau rules are you not required to show the ability to repay the loan.

    1. Hi Jenny:

      You’re correct that you can keep making the payments without having to actually assume the mortgage in the case where you have a legal right to the property. Thanks!

  7. My brother died a month ago without a will. I want to know can I continue to make the the payments on his home in his name and change it in my name when its pages off.

    1. Hi Maria:

      If anyone wants to keep the house, someone has to keep making payments on it while it goes through probate. If you’re the one that gets the house when the probate process is complete, you have a couple of options. You can assume the loan by credit qualifying with the mortgage lender/servicer. You don’t have to do this, but if you do it this way, it could make it easier to refinance the loan down the line if you want. You could also just continue to make the payments. In either case, if you’re awarded the house after probate, you can put your name on the title immediately. The house is yours and the mortgage is a lien on the house until it’s paid off. I hope this helps! I’m very sorry to hear about your brother’s passing.

    2. My friend and I are gonna buy a condo together. It’s a VA loan so I won’t be on the deed or loan…. what can I do to protect my part….. would making a will stating i am the executor and I get half upon her passing and can stay in property until my passing then the property goes to both of our heirs…. would that protect me or could it be contested?

      1. Hi Donna:

        I’m not an expert in estate planning, but I would talk to someone about the will option. I will tell you that you are being on the title would make it a VA joint loan and not every lender does those. However, you should be able to talk to an estate planning attorney about the best way to protect your interest. That would be where I would start.

  8. We are in the process of filing bankruptcy and we want to keep our home. My wife was on the deed to her mothers home and not the mortgage and her mother passed. We assumed the loan. Our attorney is telling us that we may loose the home because my wives name was on the deed and not the mortgage when her mother passed. But then we assumed the loan. Is there anything we can do to not lose our home?

    1. Hi Donald:

      I might talk to the mortgage company and the attorney about the appropriate way to go about this, but if the loan was properly assumed, she’s now on the deed and I don’t see how it would cause a problem. My advice would be to talk to the mortgage servicer that you pay the bill to and go from there.

  9. My wife and have two grown children,we still have a mortgage balance, can they take over payments, or do they have to refinance also..California law

    1. Hi Tony:

      Your children can take over the payments without refinancing if your lender/servicer agrees to let them assume the loan. They have to credit qualify and it has to be done with lender and/or servicer permission, though. Alternatively, they could just make the payments, but it would still be under your name unless and until they assume or refinance the loan. If you pass, that may not matter to you as much as it would when you’re living. I hope this helps give you an idea of the issues to think about.

  10. My mother-in -law wants to leave me the house she is currently living in when she passes. She has been trying to get her affairs in order since she ia not in good health. She was told I needed to provide my information including SSN. She still has a loan through the bank. Will I be responsible for the loan if she passes?

    1. Hi Samantha:

      If she passes and you want to keep the house, you need to keep making the payments. Otherwise, the lender will take the house. However, since you aren’t named on the loan, having the foreclosure wouldn’t affect your credit.

      They would need your Social Security number if you wanted to assume the loan and put your name on it. You don’t have to do that. You can keep making the payments whether your name is on it or not. The advantage of assuming the loan is that you would then be able to refinance if you wanted to down the line. You would be responsible for the loan at that point, though. I hope this helps!

  11. My grandfather passed away in 2010 and he was the sole lender on the mortgage. My grandmother, being his spouse, took over payments but never assumed the loan. She just recently passed away and there was no will left. What happens to the mortgage now?

    1. Hi Erika:

      I’m sorry to hear about the loss of your grandparents.

      When it comes to the mortgage, if anyone wants to keep the house, someone will have to keep making the payments. At some point, once the house gets through probate and it’s decided who’s getting the home, they can then choose to assume the loan or refinance it in their name if they want or just keep making the payments. If they assume the loan, they would work with the lender or mortgage servicer. If they refinance, they can choose to go anywhere to get a new loan. Hope this helps!
      .

  12. My uncle died a year-and-a-half ago and he had a balloon loan my aunt took over the payments only to find out today that she has two weeks to pay off the Loan of $51.000 . Is it their responsibility to give a notice and if so is it legal for them to give them only two week notice.

    1. Hi Linda:

      As far as legal notice, I don’t know. You would have to ask a lawyer in your area.

      As far as the problem itself, she might be able to refinance if she has enough equity between payments and possible increased property value. That might be the best option if she doesn’t have the money. Two weeks is a tight timeline for anything, though. I would talk to the lender or servicer and see if they have any options for you. In addition, you can talk to one of our Home Loan Experts at (888) 980-6716.

    1. Hi Kathleen:

      I’m sorry to hear about the passing of your sister. In reference to what happens to the home, it all depends on who was left in the will as the executor of the estate. The executor can either sell the home, pay the loan in the deceased individual’s name, or refinance the mortgage into their own name. The lender will only sell the home to recoup the debt if payments on the loan stop. This means if someone intends to keep the home, they must continue to pay the mortgage. I would recommend you contact the servicer of your sister’s loan to talk through your options, and perhaps seek legal counsel to determine if your sister declared an executor. I hope this helps.

  13. I wanted find out about my dads home that we r currently living in. When he passes and I’m the executor of will. Can I still pay mortgage and live in his house. Also. Should I get my name on deed before he passes or will the lender put my name on it after paid off

    1. Hi Barbara:

      As long as the house goes to you, you can just keep paying the mortgage. The deed is different. That would go in your name as part of the estate process. For the mortgage, you would refinance it into your name, but you have the option to just keep making the payments. Hope this helps!

      1. When making the payments for years, as a heir, and interest rates are lower than the original loan…would a normal refi to get the best rate and the loan in your name be the next step?

        1. Hi Geneva:

          That seems like a sensible next step for you. If you want to go over your options online, you can get a full refinance approval through Rocket Mortgage or go ahead and give one of our Home Loan Experts a call at (888) 980-6716. Hope this helps. Have a great day!

      2. What happens if I am appointed executor, but want the mortgage to go to another relative? Would I have the authority to do that? In this case that relative is already the title holder, but the loan is in my father’s name only, and he has passed. It is preferably that they assume the loan; however, may not qualify. What are our best options?

        1. Hi Monique:

          They have the option of assuming the mortgage if they qualify, but they don’t have to take on the responsibility for that debt if they don’t want to. They can continue making mortgage payments without assuming the loan formally. As long as they continue to make the mortgage payments, they can stay in the house. If they stop making the payments, it eventually forecloses back to the lender, but they wouldn’t be held responsible for the debt unless they assumed the loan. The advantage to assuming the loan would be the ability to refinance down the line if they wanted. Hope this helps!

  14. My mother passed away in October of 2015. She paid her mortgage off a month before she passed away. We never received any kind of paper work from the loan company acknowledging the payoff. I reached out to the company and they are still to this day giving me the run around about paperwork. What else can I do to obtain the deed back to her home and property?

    1. Hi Katherine:

      If the lien on the property has been removed, that should be on record with the county. The deed is different. She should already have that. You get it at closing when you buy the property. When you buy a house, you own it right away. Your lender just puts a lien on there until you pay off the mortgage. I would think you should be able to get the payoff paperwork from them as long as you send in a death certificate or something. I hope this helps!

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