When people inherit a home from a deceased friend or relative, they often think the process runs like it does in the movies. The lawyer reads the will, the home gets left to you, and roll credits as you spend the rest of your life in your new home. Unfortunately, the reality could wind up being much more stressful and frustrating than any movie you have ever seen.
Inheritance Versus The Sale Of Real Estate
Most states have laws that separate the process of inheriting a property from buying real estate very clearly. There are provisions made for allowing for the transfer of the deed and the loan to the person who inherited the property. But lenders are allowed to have their own rules, and many lenders choose to insist that the loan for the property remains written for the deceased and that cannot change.
Due On Sale
Most mortgages have a “due on sale” clause that says that the loan must be paid in full before the property can be transferred to a new owner. One way to bypass is to sign the promissory note for the property, but this involves a full credit check and approved financing. If you have bad or questionable credit, then you are not going to be able to sign the note and the bank can call on the due on sale clause before it will allow the property to be transferred.
Get The Deed Changed
If the mortgage holder on the home you inherited is playing a hard line with the loan, then the first step you should take is to use your status as the designated property owner to get the deed in your name. You can do this very simply by using the quitclaim deed process and the will from the deceased.
Make The Payments
In the end, all the mortgage holder wants is the money for the loan. As you are getting the quitclaim deed straightened out, all you need to do to keep the property from being seized is make the monthly mortgage payments. Some lenders might still try to seize the property, but if the lender is getting its money then it is unlikely to take action.
Refinance When You Can
The only way to transfer a loan from one person to another is to refinance the property in your name. As you are making the payments on the loan, you should take steps to improve your credit and then refinance the property in your name when the time comes.
Inheriting a house does not automatically mean that it is yours free and clear. If there is still a loan against the property, then you will have to work with the mortgage holder to determine what can be done to transfer the loan to your name.