When should you notify the mortgage company of death?

Home Forums Mortgage When should you notify the mortgage company of death?

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    StellarFi
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    StellarFi
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    As soon as possible. This can help clarify further steps around mortgage repayment, property inheritance, foreclosure, or sale as the case may be. If a property is still on a mortgage when the original buyer dies, any debt, including a mortgage, is never automatically waived off or forgiven. The only situation where the burden of paying back the mortgage doesn’t fall upon the family is if the deceased had taken out a mortgage life insurance. In this case, the insurance company pays off the remaining mortgage debt and the family can continue to live on the property without any financial obligations.

    However, if that is not the case, the property passes on to the heir named in the deceased’s will (if there is one). The title is transferred to the heir and they become responsible for continuing the mortgage payments. The heir can also choose to sell the property and use part of the proceeds to pay off the mortgage. If the heir doesn’t pay back the mortgage but continues to hold the property in their name, their credit score is hurt and the lender may foreclose the property.

    If there is no will or named heir, an executor is appointed for the deceased’s estate. The remaining assets of the deceased are used to pay off any debt, including a mortgage, after which the remaining funds and assets are distributed to the chosen heir. The executor may also choose to sell off the property to pay back the mortgage.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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