When your loved one listed you as the beneficiary of their home in their will, they thought they were being generous – and so did you. However, they intended to have the mortgage paid off before they passed away. Sadly, that didn’t happen.
What do you do? You have a few options. However, you need to act relatively quickly.
Review the mortgage documents
The first thing that you (and the estate’s executor, if that’s someone else) need to do is determine what company was servicing the mortgage. This often isn’t the original lender. The servicer needs to be notified of the death and will require a copy of the death certificate.
Find out how much is left on the mortgage and the monthly payments. Determine whether your loved one had mortgage protection insurance. If they did, that insurance should pay off the mortgage.
If they didn’t have this insurance, you’ll need to decide whether you can afford to pay off the mortgage or at least take over the payments. This will depend on how much is still owed and on whether any other inheritance you’re receiving can help you pay it off or at least down.
Deciding whether to keep or sell the home
You could either sell the home to pay off the mortgage and keep any remaining money as your inheritance or keep the home. If you keep it, you’ll need to either continue making payments on the loan or use other assets to pay it off.
If you can’t afford to keep the home, you’ll need to sell it. Unless your loved one was “underwater” on their mortgage, you should get at least enough from the sale to pay it off. If you can’t, the lender will take it.
If you’re keeping the home, the most important thing to do in the immediate future is to take over the loan payments until you put the mortgage in your name or pay it off. You don’t want it going into foreclosure. The servicer should give you at least a month after the death to do that but getting in touch with them as soon as possible is crucial.
This is just the beginning of the steps you’ll need to take when you inherit a piece of property like a home. Having experienced legal guidance can help you avoid costly mistakes and make the process go more smoothly.