Losing a loved one is very difficult no matter what the circumstances. You can be left emotionally drained and then, after the funeral there’s still a lot to deal with. You’ll have to sort through all the legal documents, look over financial information and take care of the will for them. It can be quite overwhelming. Many people find themselves the heir of a house, which can be good, or bad. If it’s paid for that’s one story, but what do you do if you inherit a house with money still owed on the mortgage? Inheriting property is not anything new, and most people can work through the process relatively easily. But it’s a different story if you inherited a house with a loan. Do you have to assume the loan? What exactly are you supposed to do? You may actually have several possible options you can choose from. Are the processes different everywhere or pretty much the same for places outside of San Antonio? We cover all of those topics in this article.
Who is going to take over the care of the home?
One of the things you will need to determine first is who is to take over the home. For instance, is there a co-signer on the mortgage? If there is a co-signer on the house loan, they will be responsible for taking over the payments. But, if the home was left to an heir, then they will be the one responsible for the payments, even if it was left to more than one person. Finding out exactly who is responsible for the mortgage is important so you’ll be able to work with the lender to work out details.
It’s important to find the paperwork regarding the mortgage and at least find out who the lender is. Then you or your attorney will need to explain the situation to the lender to notify them. In most cases, they will request a copy of the death certificate before moving forward. Once they can verify the death of the initial borrower, they can inform the family how much is left on the loan and what the monthly payments run. After this, you’ll have the information necessary to decide how you will deal with the house and the mortgage.
What do I do if I inherit a house with a mortgage in San Antonio?
The law allows relatives, including spouses, who inherit a house with a mortgage to assume the existing mortgage. They do not have to worry about trying to secure another loan or qualifying for the existing loans. The Garn-St. Germain Depository Institutions Act of 1982 protects relatives who inherit a house with a loan in place. However, they have to live in the home and continue making all the payments as required. The mortgage can remain in the name of the deceased relative if they so desire.
What other issues can there be if I inherited a house with liens?
There are times a person inherits a house with money still owed on the mortgage, but sometimes there are other situations like owing back property taxes or liens. The ideal situation is for the executor to have already taken care of back taxes or existent liens before the property is passed on, however, it does occur sometimes. When there are property taxes, mortgage liens or other liens attached to properties, they do not simply disappear when the owner dies. If you inherit a house with liens, you are responsible for those liens as well. You should consult with an attorney or a financial planner to help work through how to handle these types of situation so you do not lose the property.
Can I assume a mortgage if I’m not related to the deceased?
The Garn-St. Germain law allows spouses or other relatives to assume mortgages when they inherit property with a mortgage. But other than relatives, others cannot simply assume a mortgage even though they inherited the house. In some instances, a person who inherits mortgaged property will be able to sell the property; and sometimes they just let it go into foreclosure. And of course, no one can be forced to take over a mortgage simply because it was inherited.
What happens if there is no heir and no co-signer?
There are instances when a homeowner passes away and does not leave it to an heir and there is not a co-signer on the mortgage. In these cases, a lender or bank will still need to collect the debt they are owed. Most of the time, they will end up putting the house up for sale to try to reduce the debt. If the sale of the home does not cover the entire amount owed, then the lending facility may seize other assets that belonged to the deceased to try and cover the remaining balance. These types of actions can be regulated by specific laws in different regions.
What if the deceased had mortgage life insurance?
Sometimes, a homeowner purchases mortgage life insurance. This can really simplify the process of dealing with mortgaged house after a death. If the homeowner has this type of insurance and dies before the mortgage is paid off, the insurance will pay off the mortgage. Then the heir will inherit the home, but the mortgage will be paid first.
What if the house had a reverse mortgage?
Sometimes inherited property has a reverse mortgage agreement on it, as happens a lot in San Antonio, TX. This means the original owner took out cash for the equity they had in the home and agreed to repay the loan if he ever moved out. If a person inherits a house with a reverse mortgage on it, they typically have to repay the loan inside a certain time frame. This is usually six months, but it can vary. If you receive property that has a reverse mortgage, you will have to pay it off in order to retain ownership. It is possible to either get a new mortgage to pay off what is owned, or you can sell the home to pay off the reverse mortgage.