If my mother died recently and I will be inheriting her home, what will happen to her mortgage?

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If my mother died recently and I will be inheriting her home, what will happen to her mortgage?

There is no Will or spouse. She had a mortgage, on which I am making the payments. I have not notified the mortgage company. I am unable to obtain financing for a home in my name due to low credit score. It was my mother’s wish that the house be mine upon her death, yet I am afraid if I notify the mortgage company, I could lose the home. Does the law allow me to assume this loan without going through some type of approval process with lender? If the lender finds out, can they pull the loan? I don’t want to lose the house.

Asked on January 7, 2016 under Real Estate Law, Arkansas

Answers:

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

Answered 5 years ago | Contributor

Take a breath...there is good news here. Typcially, when a mortgaged property that changes ownership, the mortgage lender has the right to demand full payment of the mortgage balance. This is becuase of what is known as a "due on sale" clause. This clause allows the lender to call the mortgage due if a home becomes titled in another person's name.
That having been said, when a home that is mortgaged is inherited, the person who inherits gets the property and automatically takes over the loan; the lender can't call the mortgage due as long the monthly payments are made on time.


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