Homeowners rarely think about dying when they apply for a mortgage, but legal experts urge buyers, especially older buyers, to learn about what happens to their loan and their property if they die before the balance is paid in full. Bernard A. Krooks, an elder law expert, stresses that seniors need to be informed so that they do not add another financial burden to those their loved ones may already be facing.
Nanci L. Weissgold, a partner at Alston & Bird, adds that mortgages are secured loans. This means that heirs will not face credit damage if they fail to pay the mortgage, unless they were cosigners on the loan. She does, however, state that they should continue to make payments if they are able to prevent the property from being foreclosed upon or from fines being added to the loan. Weissgold also reminds heirs that lenders will often work with them to arrange payments and avoid foreclosure in the event of a death if they’re notified promptly.
Lenders often have their own terms regarding the death of the borrower, and many of these details are found in the fine print. Some allow others such as the surviving spouse to assume the loan upon the borrower’s death, but others may not, especially if the spouse has no income. Heirs who are in this situation will need to consult with the mortgage company, an accountant, or an estate lawyer.
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