What happens to a mortgage after the borrower dies?

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What happens to a mortgage after the borrower dies?

My mother died 6 months ago and had mortgage on her home. I am executrix of estate. My siblings and I don’t want to sell home. Received insurance premiums which aren’t enough to payoff mortgage. 40K owed on home worth 100K. Making payments on remaining balance which was established through 2019. Can deed/mortgage remain in deceased’s name until paid off? Home is occupied and maintained though no one in position to purchase home outright at this time. How do laws apply?

Asked on October 12, 2010 under Estate Planning, Pennsylvania

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A person(s) who inherits a property becomes responsible for paying the mortgage(s) on it. Unless the mortgage has what is known as an "acceleration clause" that is triggered by the death of the mortgagor, the lender is typically required to continue to accept the monthly payment until the maturity date.  This benefits the person who is inheriting since they do not have to go through the lender's application process and qualify for the mortgage.

An acceleration clause is a provision in a mortgage that allows the lender to demand immediate payment in full of the remaining balance of the mortgage if certain events occur (such as the sale of the property,  late payments, or the refinance of the mortgage loan).  Typically, however, it is rare to find such clauses that provide for acceleration upon the death of the property owner.

Bottom line, as long as your keep making all mortgage payments on time, you should be fine.


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