Probate & Mortgages

Reverse Mortgage

Reverse mortgages become due when the owner dies.

Traditional Mortgage

With a traditional mortgage the question often is something like, “If Dad dies and leaves me his house (with a traditional mortgage) can I keep making the mortgage payments or do I have to get a new mortgage?”

As a general rule the bank or mortgage holder can often call the mortgage in when the owner dies. As a practical matter, if the interest rate on the mortgage is the same or higher than current rates, the mortgage holder may have no interest in calling the mortgage in. But if current mortgage rates are higher than the interest rate on the mortgage, than the mortgage holder may very well seek to call the mortgage in.

BUT IN EITHER CASE, the home insurance must reflect the new owner to avoid letting the insurance company having a defense, for example, to not paying a claim for a house fire. So, our advice would be to let the insurance and mortgage know of the change of ownership—the mortgage company probably is making the mortgage payments out of escrow account.