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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 119 Comments

  1. My mom passed away three years ago and I continue to pay the mortgage on the house. She left no living will and there are nine siblings including me. We had a lawyer draw up paperwork work to make me administrator of her estate. I tried to get insurance on the house but I could not because the house is still deeded in her name. She only owes about 5000 on the mortgage. If I have the housed deeded into all the siblings name would the house have to be refinanced and would I have to apply for a loan.

    1. Hi Sharon:

      I’m sorry to hear about the death of your mother. I would contact your mortgage servicer (whoever you make your payments to) and determine what their policies are before moving forward as every company is a little different. Because you were all immediate family, the title transfer is more likely to be viewed as permitted, but I would rather have you talk to them before you make any decisions that are hard to reverse. You have my condolences!

    1. Hi John:

      If the person who’s on the loan passes away, the first thing you can do is contact the mortgage company so the bill stops coming to them and instead comes to you. In terms of actually dealing with the loan, you have a couple of options.

      The first option is to just continue making the payments. You don’t have to be on the loan to continue living there.

      The second option is to credit qualify to get your name on the loan. You can either do this around the time the person passes away or when you might want to refinance the property in the future. If you ever wanted to refinance, you would need to actually qualify to make the payments and get your name on the loan. I hope this helps!

  2. my mom passed last year had a reverse mortgage on the house, my niece wants to buy the house. what steps do we need to do. oh reverse has filed foreclosure on the house but it has not been entered with the court yet. house is in florida.

    1. Hi Mike:

      If the reverse mortgage provider has filed foreclosure already, you and your niece should contact the lender immediately in order to see if you might have any options. Typically, one of the scenarios that would be available to you is to have her qualify to refinance the loan into a regular forward mortgage that she can then make payments on. Then the title could just be transferred to her when you handle the transfer of assets from the estate. In your case, I do recommend contacting the lender as soon as possible. I’m sorry to hear about your mom. I hope this has been at least a bit helpful.

  3. My sister recently passed away but her name was the only one name on the house but her daughter is the beneficiary on the House my brother and I are paying the mortgage

    1. Hi Gloria:

      I’m sorry to hear about your sister. It’s her daughter’s house. That much I can tell you. What you decide to do with the mortgage in the long term is up to you and your family. I would speak to the mortgage servicer who you’ve been making the payments to in order to go over your options as a group.

  4. can you send me a phone number and name of someone inside Quicken/Rocket Mortgage to discuss this with. We are in this very scenario and the mortgage is held by you all. All the phone numbers available online get you to new mortgage consultants.

    1. Hi Rob:

      I’m going to get this to our client relations team, but I’ll also give you the number for our servicing team which is (800) 508-0944. I’m sorry for your loss.

  5. I am concerned as to what will happen if my cousin passes with no Will. My sister and I live here with him. He is on the mortgage as well as my deceased mother as the co buyer. We make sure payments are up to date. What would happen to the house if he passes with out a Will?

    1. If he were to pass without a will, the home would probably go through probate.
      While that process was taking place, you would want to keep up payments, but eventually, someone would get the house. I’m not a lawyer, so I can’t go further than that, but I hope this helps!

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