What Happens to a Mortgage When Someone Dies?

What Happens to a Mortgage When Someone Dies?

Have you ever wondered what happens to a mortgage when someone dies?

The simple answer is that a mortgage is not forgiven when someone passes away.

A mortgage is a lien against a piece of real estate and must be repaid.

If spouses are both listed as co-owners on a loan, should one spouse pass away, nothing needs to be done as far as the mortgage is concerned:

The surviving spouse becomes the sole borrower by default and is legally responsible for the entire amount of the loan

Under federal law, if the home is passed on to a relatives, lenders must allow the family member to take over the mortgage when they inherit the property but heirs are not required to keep the mortgage in place.

They can refinance the loan if a better loan is available or they can just pay off the loan entirely.

In some cases, heirs don't want the property or they may not be able to afford the mortgage.

So in those cases, selling the home is an option.

Because each state has different rules on how title transfers - either by will or probate - it is important that you consult with an estate attorney if you have any questions.

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Impact of Unpaid Real Estate Taxes

Impact of Unpaid Real Estate Taxes - Failure to pay property taxes when due can lead to serious consequences, fines, interest, property liens or even foreclosure.
 
Most lenders require monthly mortgage
payments to include an escrow for 1/12 of the annual property taxes.
 
If your taxes aren't a part of your
monthly payment make sure you're setting aside enough to cover the annual taxes
when due.
 
Generally, if you fail to pay your
property taxes for an entire year the municipality will forward your account to
the county treasurer for collection.
 
The treasurer, at some point, can take
legal action by placing a lean against the property.
 
A tax lien impedes your ability to
refinance your current mortgage, to seek a second mortgage, or to secure a home
equity loan.
 
A tax lien supersedes any existing
mortgage against the property, so the treasure will more than likely inform the
lender of the lean and the lender in turn may take action against the
homeowner.
 
Please feel free to contact me to
discuss:
 
732.500.6883
 
Https://JGraff.AdvisorsMortgage.com
 
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What is a mortgage gift letter?

What is a mortgage gift letter?

Saving enough money to use as a down payment to purchase a home is no easy task, especially if you are buying for the 1st time. Most lenders allow gifted funds to be used as down payments but there are some restrictions.

Typically down payment gifts can only come from a relative and the property being purchased must be the primary residence for the buyers.

Lenders also typically require that the donor and the recipient both sign a mortgage gift letter.

In addition, many lenders require a paper trail of funds from the donor to the recipient, including copies of the donor's bank statements that include the gift amount.

If you receive a gift, you are not required to report it as income but the gift giver is responsible for paying any tax and filing a gift tax return.

Call me today to discuss 732.500.6883 or get personalized rate quotes or start your application online at https://JGraff.AdvisorsMortgage.com

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