Inheriting a Home Mortgage

When a beneficiary inherits a home, the question of who will pay the mortgage typically arises. Under federal law, the mortgage remains in effect when the beneficiary inherits the home, so the due-on-sale clause is negated.

The testator’s will typically specifies who has the ability to maintain the mortgage and can stipulate whether or not the beneficiary inherits the home free and clear of the mortgage. If the home transfers free and clear, then the executor will be directed to sell estate assets to pay off the mortgage.

For more information on inheriting a home mortgage, see Vickie Elmer, Inheriting a Home, and a Loan, The New York Times, Nov. 17, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.