Do Heirs Inherit The Mortgage With The House?
Inheriting a home can seem like a real blessing. Whether you want to live in it, sell it, or otherwise, a home is typically the most valuable asset a person owns and inheriting one can seem like a gift. However, what happens when the home you have inherited from a loved one still has a mortgage attached to it? Sometimes, it can put heirs in a difficult financial situation.
Unlike other types of property, personal representatives are not required to sell property within an estate to cover the person’s debts. The law creates an exception, though, for mortgages. Personal representatives do not have to pay off the mortgage on a home unless there are instructions within the will to do so. Below, our Daytona Beach estate administration lawyer outlines what happens to the mortgage on an inherited home.
What Happens to the Mortgage After Someone Passes Away?
The death of a homeowner does not eliminate the debt they owe on the property. Mortgages are secured debts, meaning that if a borrower defaults on the loan, the lender can foreclose on it. While heirs are not personally responsible for the mortgage on an inherited home, if the mortgage is not paid, the lender can initiate foreclosure proceedings to take back the home.
Heirs are left with three options when they inherit a home with a mortgage on it. They can either keep the property, sell the home and keep the equity, or allow the lender to foreclose.
Steps to Take After Inheriting a Mortgage
Before deciding what to do with an inherited home, it is critical that you understand the physical condition and the terms of the home loan. After inheriting a house with a mortgage, it is important to complete the following steps:
- Determine the value of the property: Before you can make a decision regarding the home, you must first know its value. The personal representative should include the fair market value of the home in the inventory of the estate. You can also have the home formally appraised. If there are repairs needed, you should also speak to a contractor about those costs. You should also understand the mortgages that are on the home, as well as liens.
- Determine long-term costs: If you wish to keep the home, it is critical that you understand the long-term costs of keeping it. Many heirs cannot afford the cost of property taxes, the mortgage, maintenance expenses, insurance, and other costs of owning a home. In these instances, the home may have to be sold or rented out.
- Discuss with other heirs: Many times, a person leaves a home to multiple people, such as their three children. With or without a mortgage, the property cannot be sold unless all co-owners agree to it. If you believe selling the property is your best option, it is important to discuss the possibility with other heirs.
Our Estate Administration Lawyer in Daytona Beach Can Help
After inheriting a home with a mortgage, it is critical to speak to a Daytona Beach estate administration lawyer. At Bundza & Rodriguez, our experienced attorney can outline your options and help you determine what to do with the property. Call us today at 386-252-5170 or chat with us online to schedule a consultation and to get the legal help you need.
Source:
flsenate.gov/Laws/Statutes/2018/0702.01
