January 13, 2023
When someone inherits a property, it often comes with a mortgage that must be paid monthly or paid off upon the final sale of the house. This is usually fine if the heirs are left with money that can be used to make those payments or if one of the heirs has the ability to keep making the payments on the house. This is rarely the case. When the mortgage is left unpaid, the lender can start the foreclosure process, which adds time to the probate process and makes it even more stressful. Many times, when people inherit property, there is neglected maintenance to attend to, along with a lifetime of belongings.
What should you do?
When the amount owed on the mortgage is close to the current value of the home, it might make sense to sell the house and keep the current mortgage in place. Why would you do that? In most cases, it would be the way to get you and the heirs the most money for the house. The buyer will be able to pay more for the property because they will not have to front as much money to buy the house. This also works in your favor because you can get the things you want out of the house and leave the rest.
How does the process work?
The process is called “subject to,” which means the purchase of the house is subject to the current mortgage. A third-party servicer is used to make sure the mortgage is paid each month so the bank will not come after you or the deceased person. The buyer catches up on the mortgage payments and continues making them monthly. A title company handles the transfer of the title and provides title insurance on the property. The heirs are then able to put the situation behind them.
Give us a call to learn if this might be a good solution for you and the heirs or if another option would be better.
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