​Should You Pay the Mortgage If Someone Dies?

The loss of a parent or spouse is one of the most stressful events many of us will face during our lifetimes. In addition to the tremendous emotional burden, the loss of a parent or spouse is often accompanied by complicated legal and financial issues. Just one of them is how to pay the mortgage if someone dies.

One of the most daunting questions facing people who lose a parent or spouse is what to do with the home. This question is made even more complicated if the house still has a mortgage.

Typically, if there is a surviving spouse, the spouse will inherit the property and must make any mortgage payments.

If there is no surviving spouse, the children are usually next in line to inherit any assets. A child may inherit the house, the mortgage will remain in effect, and the beneficiary can continue making mortgage payments until the debt is satisfied.

Someone Must Pay the Mortgage If a Parent or Spouse Dies

If a spouse or parent dies and there is still a mortgage on the house, it’s important that someone continues to pay the mortgage. The bank should not demand that you pay off the mortgage immediately, but sometimes they do so anyway. It is nevertheless important that someone take responsibility for paying the mortgage, otherwise the bank may foreclose.

A 1982 federal law makes it easy for someone who inherits a home from parents or a spouse to assume the mortgage. The Garn-St. Germain Depository Institutions Act of 1982 allows relatives who inherit a home with a mortgage to take over the mortgage payments. There is no need to refinance. This firm recommends you not send any notification to the mortgage company, merely keep making the payments.

Even if you decide not to keep the home, it is important that you continue to make the mortgage payments; otherwise, the lender could pursue foreclosure. It is also important that you continue to pay property taxes and insurance payments for the same reason.

If the house is "upside down" and there are no other assets, and no co-signers, you may be able to deed the house back to the bank. Please seek legal advice.

Any Co-Borrowers Must Pay the Mortgage If a Parent or Spouse Dies

If your parent co-owned the home with a spouse or other co-borrower, the co-borrower will assume legal responsibility for the debt and must continue paying the mortgage. If she does not, the bank could foreclose.

The deed to the property could give someone a right of survivorship. In that case, ownership of the property will pass to that person, and he or she will assume responsibility for the mortgage.

The home could also pass according to the deceased's Last Will and Testament, if he or she had one, or according to Ohio’s laws of intestacy if your parent died without a Will. Regardless of how the property passes, whoever inherits the property will be responsible for paying the mortgage.

If there is no right of survivorship and no co-borrower, the estate of the deceased person will be legally responsible for paying the debt. The estate administrator could decide to sell the house, pay off the mortgage, and distribute any remaining asset to the heirs or beneficiaries.

The Estate Holds the Property Until It Is Passed to the Heirs or Beneficiaries

When a person dies, their property is held by the estate until it is passed on to their heirs or beneficiaries through a Last Will and Testament, Trust, Transfer on Death Affidavit, or according to the laws of intestacy.

In most cases, children are not responsible for the debts of a deceased parent. However, if a child wishes to keep the home and the property still has a mortgage, the child must take over the mortgage payments. If the mortgage goes unpaid, the lender can foreclose and make a claim against the estate.

Use Life Insurance Proceeds to Pay the Mortgage If a Parent or Spouse Dies?

If your parent or spouse had a life insurance policy, you could use those funds to pay off the mortgage. These funds are not subject to probate, and will be paid to the beneficiary of the insurance policy. Before doing so, it is strongly recommended you seek legal advice, especially if there are other heirs who are not beneficiaries of the life insurance.

If there is not enough money in the estate or from insurance proceeds to pay off the mortgage, the property will be sold and the proceeds will be divided among the heirs or beneficiaries.

There is a 6 month limit on Creditor Claims in Ohio. If a creditor does not make a claim, the debt goes away. If the creditor does make a claim, those debts must be satisfied before any money is distributed to the heirs of the deceased. Even though you will not become legally responsible for your parent’s debts, those debts may reduce - or even eliminate - your inheritance.

Concerned About Whether to Pay the Mortgage If a Parent or Spouse Dies? Contact Wolfe Legal Services Today

The loss of a spouse or parent can be difficult, and is often accompanied by complex legal and financial issues. If you or your family needs help with probate or estate administration, contact Wolfe Legal Servicestoday.

I have more than 23 years experience providing probate and estate planning services to people throughout greater Columbus, including Dublin, Worthington, Westerville, Bexley, Delaware, Upper Arlington, New Albany, Marysville, Hilliard, Delaware, and Newark, and throughout Franklin County, Delaware County, Pickaway County, Fairfield County, Union County, and Licking County. Call or Text (614) 263-5297 any time or complete our secure, confidential, and free online form located on the home page.