After losing a loved one, many family members face the question, “What happens to the mortgage when someone dies?”
Who Pays the Mortgage After the Death of a Loved One
When a loved one dies, their mortgage does not simply disappear. Someone must take responsibility for handling the debts and assets of a recently deceased relative. Critical factors influencing who will be responsible for making sure the mortgage is paid include: (1) Did the deceased person die with or without a Will? (2) Was the deceased person married? and (3) Was anyone named as a co-borrower on the account?
Testate vs. Intestate
A key to determining who is responsible for handling the debts and assets of a recently deceased relative is whether your relative died with or without a Will.
Someone who died with a Will is said to have died testate. The terms of the Will should identify who will act as the estate representative and, in many cases, who will inherit the house.
A person who dies without a Will is said to have died intestate. When a person dies without a Will, state law determines who will be responsible for handling the deceased person’s affairs and who will inherit the house.
The Rights of a Surviving Spouse
In most cases, spouses hold title to their residence jointly with rights of survivorship. When one spouse dies, the house is transferred to the surviving spouse, who will be responsible for making mortgage payments. If the spouse does not have a survivorship interest of the house, you can still assume the mortgage if you meet certain criteria. Under the Garn-St. Germain Depository Institutions Act of 1982, a relative who inherits a home can take over the mortgage payments without refinancing the house. Even if you decide not to keep the home, you should continue making mortgage payments to avoid foreclosure.
When There Is a Co-Borrower
If the deceased person co-owned the home, the co-borrower will assume legal responsibility for the debt and must continue paying the mortgage. If the co-borrower does not continue making payments, the bank could foreclose.
Children Are Not Responsible for Paying the Debts of Deceased Parent
The children of a deceased person generally are not responsible for paying a deceased parent’s debts. In Ohio, creditors have six months to make claims against an estate. If a creditor fails to present a claim within six months, the debt goes away. If a creditor does make a claim, that debt must be satisfied before any money will be distributed to the heirs of your deceased relative. We have also written a blog discussing the responsibility for a spouse's debt after death.
When to Notify the Mortgage Company of the Death of a Loved One
When a loved one dies, you should notify the mortgage company quickly. Typically, the mortgage company will require a copy of the death certificate. If no one notifies the mortgage company or pays the mortgage, the loan servicer could begin foreclosing on the home.
When the House Becomes Property of the Estate
When a person dies and the house does not transfer to a surviving spouse, co-owner, or Transfer on Death (TOD) beneficiary, it becomes part of the deceased person’s estate until it is transferred to heirs or beneficiaries through a Will, or according to the laws of intestacy.
If a parent died with a Will, it should identify the person responsible for handling the deceased person’s estate.
If there is no Will, the court will appoint an administrator who will be responsible for taking an inventory of the property, paying the deceased person’s bills, and distributing the estate to family members according to Ohio’s laws of intestacy.
Contact the Probate and Estate Administration Lawyers at RKPT
Losing a loved one is difficult and often accompanied by complex legal and financial issues. If your family needs assistance with probate or estate administration, the personal planning attorneys at RKPT are here to help. With offices in Cincinnati and Blue Ash, Ohio, our lawyers are proud to serve the needs of people throughout the Midwest and Florida. Let us shoulder the burden of handling the estate and probate administration process so you can spend time with your family and grieve the loss of a loved one.
To learn more, contact RKPT today by calling (513) 721-3330. Our lawyers have decades of experience and will guide you through the probate and estate administration process and handle much of the work for you. Save time and money by putting our knowledge and experience to work for you.
