What Happens to Your Mortgage When You Inherit a Home
Inheriting a home that still has a mortgage attached raises a common concern: does the existing loan need to be paid off immediately, or can the heir simply keep making payments on the loan as it exists? Federal protections generally make the latter possible, though there are specific steps involved. The due-on-sale clause and its exception for heirs Most mortgages include a due-on-sale clause, which generally allows the lender to require full repayment when a property changes ownership. However, federal law includes a specific exception for certain transfers, including to a relative upon the borrower's death, which generally allows an heir to take over the existing loan without triggering that due-on-sale requirement or needing to immediately qualify for a new loan. The heir doesn't automatically need to requalify Because of this exception, an heir generally isn't required to go through a full new loan qualification process just to keep making payments on the exist...