If you’ve recently inherited a home with a loan, you may be wondering what happens next. Dealing with the loss of a loved one is never easy, especially when there are complicated financial or legal matters involved. But you don’t have to go through it alone; we’re here to help answer any questions you have about home financing. Below, we’ve explained what happens when someone inherits a home that has a mortgage.
Inheritance through Probate
When a property is inherited through probate, it means the deceased person’s estate goes through a court-supervised process to validate the will and distribute the assets according to the will (or state law if there is no will). This process can take several months to over a year, depending on the complexity of the estate and the specific probate laws of the state.
The executor appointed in the will, or an administrator if there is no will, is responsible for managing the estate, which includes paying debts, handling the mortgage, and distributing the assets to the heirs.
During the probate process, the estate is responsible for maintaining mortgage payments. Failure to keep up with payments can lead to foreclosure before the property is even transferred to the heir.
Inheritance through a Trust
A trust does not go through the probate process. Instead, the property held in the trust is managed and transferred by a trustee according to the terms set out in the trust document. This is generally a faster process than probate and can happen outside of court supervision.
Transfer of ownership can be easier and faster, as the trustee can transfer the property to the beneficiary without waiting for probate clearance. This also makes it easier to assume the mortgage.
Assuming the Mortgage of an Inherited Property
To assume the home loan of an inherited property, follow these simplified steps:
- Notify the lender: Immediately after inheriting the property, contact the mortgage lender. Provide them with the death certificate and any necessary legal proof of your inheritance, such as probate or trust documents.
- Review the mortgage terms: Check the terms of the original mortgage agreement. Generally, relatives can assume an existing mortgage under the same terms without having to requalify, according to federal law.
- Complete the assumption agreement: If the lender permits it, they will guide you through the process of signing an agreement to transfer the mortgage into your name. Note that there may be fees and a possible credit check involved.
- Start making payments: Begin making mortgage payments on the next due date after assuming the mortgage to avoid any risk of foreclosure.
Let Us Guide You Through the Process
We understand that inheriting a property from a loved one can be an emotional and confusing experience. We’re here to answer any questions you may have about your home loan. Call now to get in touch.
