What happens to a mortgage loan on a home that goes into probate? Can I keep the same loan arrangement w/ the lender or will it have to be refinanced?

I’m not sure if the loan was sold off to another party by the bank. Will this make a difference?

Asked on June 29, 2009 under Estate Planning, California

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

As long as the home is still in the estate, and not deeded to one of the heirs, the loan can probably stay in place, as long as the payments are kept current by the estate (executor);  this is an entirely proper use of other money such as bank accounts that are in the estate, and the same is true for property taxes on the estate.  It probably doesn't matter whether the loan was sold or not. After the house is transferred out of the estate, it may be possible for the heir to assume the loan, but that's not certain.

I'm not a California attorney, and the law in your state may have something to do with what happens here.  The terms of the mortgage (including, but not limited to, whether it is assumable) will also have to be considered, along with the other details of the estate. One place to find a lawyer who can sort through the details for you is our website, http://attorneypages.com


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