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When Your Mortgage Outlives You


As the Wall Street Journal points out in "What Happens When a Homeowner Dies Before the Mortgage Is Paid?," inheriting a house with a mortgage can often be problematic. Many people automatically assume that if they make the mortgage payments, then they will automatically be able to continue the mortgage. Others think they have a right to refinance the mortgage with the lender.

Unfortunately, neither is the case in all situations.

A federal law does restrict when a lender can cancel a loan due to death, but only if very specific conditions are met.

The harsh reality is that the rules vary widely about continuing a mortgage after the homeowner passes away. Lenders are often free to enforce their own policies, which are usually buried in the fine print of the mortgage documents. The good news is that when most lenders are informed of a homeowner's death, they are willing to be patient before beginning foreclosure proceedings as they understand that legal requirements often get in the way of fast processing.

When you get a mortgage it is a good idea to ask the lender about what will happen if you pass away before the mortgage is paid.

If you inherit a home with a mortgage, then speak to an estate attorney about your options.

Reference: Wall Street Journal (April 6, 2016) "What Happens When a Homeowner Dies Before the Mortgage Is Paid?

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