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Will you inherit your parents’ mortgage?

On Behalf of | Apr 26, 2024 | Estate Planning |

Debt can be complicated when someone passes away. We have previously discussed the fact that many minor debts have to be paid off by the estate executor. For instance, they may need to pay property taxes or pay off credit cards. This debt is not inherited by the adult children or any other beneficiaries but is simply taken care of by the executor.

That said, what about a home mortgage? For instance, say that your parents recently passed away and left you their home. The housing market is very competitive right now, so you were stunned to finally have your own place to live. 

But it turned out that it wasn’t free and clear, because your parents still had 10 years to pay on the mortgage. Do you get to keep the house, do you inherit the mortgage or is the lender going to reclaim the home and sell it to someone else at an inflated price?

The beneficiary typically takes over the mortgage

Generally speaking, yes, you would have to take over the mortgage in order to keep the house. That could still be beneficial to you because the terms of that mortgage may be far better than you’d get today. You would have to pay for 10 years, as opposed to 15 or 30. 

However, you don’t just get to keep the house – without paying back the lender – because it was given to you in the will. If you did neglect to make those payments, then the lender would be within their rights to foreclose.

This can also sometimes get complicated if multiple heirs are involved. They may all be responsible for making the pavements and at risk of foreclosure if they do not.

Legal options

Issues like this are not only complex but expensive. A lot of money is on the line, so it certainly pays for you to understand exactly what legal options you have.