Your mortgage transfers to someone else when you die.
When you die, your mortgage, along with any other debts and property you own, must get transferred to new owners. Generally, this happens after your estate goes through the probate process, though in some situations the mortgage may not need to be a part of that process. Talk to an attorney in your area for legal advice about mortgages, estate planning and other related issues.
Probate
Everything you own, both assets and debts, gets divided up and handed out to new owners after you die. The method through which this gets accomplished is known as the estate settling process or the probate process. The probate process is a specific legal process in which the court appoints someone to take your property and give it to your heirs and beneficiaries.
Debts and Assets
If you had a mortgage at the time of your death, that mortgage gets lumped into your estate and goes through the probate process. The person appointed to oversee your estate, called a personal representative or an executor, has the responsibility to ensure all property is properly cared for until it is given to new owners. For example, the executor has the right, and duty, to continue making mortgage payments using estate funds until he determines who should inherit the property.
Wills and Intestacy
So who gets to inherit your property after you die? There are two possibilities: you die leaving behind a valid last will and testament or you do not. If you do leave behind a will, the terms of your will determine who gets to inherit and who eventually becomes responsible for the will. If not, your state has laws, called intestate succession laws, that determine who inherits the property.
Estates and Joint Ownership
Your estate is subject to the probate process, but just because you pay the mortgage doesn't mean your house becomes part of your estate. If, for example, your mortgage is in both your and your wife's names, each of you is usually considered a joint owner with a right of survivorship. This means that if one spouse dies, the other spouse gets that spouse's ownership interest. Because your wife is still alive and still owns the property, the mortgage doesn't go through probate and your wife is still responsible for paying the mortgage.
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