You can inherit a mortgage if a family member dies and leaves you a house with a mortgage on it. States have a variety of different inheritance laws in addition to federal regulations, but some basic rules apply to this scenario. Generally, you cannot inherit only a debt or only an asset. This means that you cannot simply inherit the mortgage without also taking possession of the property to which it is attached. Likewise, you cannot inherit an asset like a property but not the mortgage that comes with it.
Payment
If you have inherited a mortgage, this means that you have also inherited the debt obligation associated with the mortgage. In other words, you have to start making the payments your relation made before death. In general, there is a waiting period during which the property belongs to an estate that is created after death. In this case, the estate makes payments from the estate assets before passing the mortgage along to you. Either way, the obligation does not cease with the death of the person who first created the mortgage.
Lender Actions
Lenders can still demand payment for a mortgage after the death of the original holder, but there are limits. A lender cannot start the foreclosure process on a property until the mortgage has been transferred. You always have the right to take over the mortgage regardless of what the lender chooses to do. A lender cannot take the house from the estate and leave you without a choice in the matter. As long as you are willing to make payments yourself, you can take over the mortgage.
Selling the Property
Selling property may also be a solution for the mortgage problem. Property sales are very common during the inheritance process. It makes it easy to turn the property into a liquid asset that can be spread between more than one heir and solves the problem of manage or care for the property. However, the property sale should also pay off the mortgage associated with it, which can limit the amount of funds you receive as an heir.
Liens
A lien is different from a mortgage. A lien is a legal action against the property, often by a lender. Lenders create liens when they have not been paid for a mortgage, but do not want to or cannot pursue the matter through a foreclosure. Liens can last long after a mortgage has been written off as lost debt, and, like mortgages, liens can be inherited. They can sometimes be hidden in the history of a property, which is why attorneys may suggest running a title search on inherited properties.
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