mortgage question in the states
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mortgage question in the states
| Sun, 02-25-2007 - 8:54am |
if you have a mortgage of lets say a relativelly small amount and you die, what happens. Does the bank take the house and sell it and get the mortgage, or do your beneficiaries get the house and take over the mortgage payments, or does the bank require once someone has died to get the lump sum owed to them. Or is this something that is already prediscussed with the bank or is it individual through wills etc... Just wondering. I don't have a mortgage, but, my dad has a little one, cause he added on to his house, and i was wondering how this works.
thanks arie
thanks arie

Probate laws vary a bit from state to state, so this is general info.
What happens to the house (or any other assets) is first of all dependent on if the deceased has a will (or trust) to distribute assets. If there is no will then the laws of the state that the deceased lived in will decide how the assets are decided (this is also a more expensive process than if the deceased had a will).
In the office where I worked (as a Probate paralegal) we paid the bills of the decease from assets (cash) of the estate during the probate process (which can range from months to years depending on the issues). In cases where there were no cash assets the firm advanced funds to pay the bills and was repaid when cash was available.
So if dad has a will and leaves the house to you then in general during the probate process we would continue making payments from the assets of the estate. Often as the probate process continues the the court would advise the atty to pay off a mortgage - thus you would recieve the house free and clear.
In the event that there were not enough cash funds available to pay the mortgage off then the court could order the sale of assets from the Estate (including the house if necessary) to pay off the mortgage.
Basically BEFORE assets are distributed, the debts (mortgage, credit cards etc) need to be satisfied and that needs to be shown to the court.
In my years of probate work I NEVER say a house foreclosed on by the bank.
Does that answer your question? Or did I give you too much info?
If you have an other questions let me know and I will try to help.
Carol
SAHM to Phillip (16 months)
and Jacob (8 years)
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arie