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What happens to my mortgage if I die?

After a person passes away, there are many things that must be handled with great care to avoid unnecessary disruption to the lives of those who survive the decedent. Administering an estate can be a complex matter, especially even if the decedent had created an estate plan prior to his or her death. For those affected by the estate settlement, a generous gift can become a burden if the details are not clearly understood as the estate is administered. This can be especially true when it comes to passing on a home with an outstanding mortgage balance.

Each year, thousands of individuals pass away before they finish paying of their mortgage. For those who survive them, it is crucial to understand how a mortgage is treated after a death. Otherwise, a beneficiary may assume that someone else is responsible for paying a mortgage, and create a heap of trouble for themselves.

A mortgage is an agreement between an individual or set of individuals and a lender. If a single person held a mortgage, a lender will not cancel the debt simply because the holder of the debt passes away. If a person wishes to maintain or assume ownership of the home, they must also assume responsibility for the remaining debt. In some cases, this may mean paying off the remaining mortgage with existing funds, but in many cases it means that the beneficiary must assume the mortgage payments or sell the house to make up the difference.

If you pass away with a mortgage in your name and leave your home to your spouse or child, they will have to assume that debt in order to continue living in the home. If they are not able to make the mortgage payments or pay it off entirely, they will not be able to keep the home or live in it.

Estate administration must be handled very carefully to ensure that your loved ones do not suffer unexpectedly if you pass away. With guidance from an experienced attorney, you can rest assured that your loved ones are truly cared for and protected.

Source: Findlaw, "Debts After Death," accessed March 24, 2017

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