What Happens When a Borrower Dies Before Paying Off a House?

​Financially preparing for your death may not be an ideal thing to do, but it's still essential, nevertheless. Especially if you want your family cared for, take note of these tips for added awareness.

Who Tends the Loan?
Several people are entitled to inheritance. However, this may depend on who you passed the legal will to -- your spouse, co-signer, designated beneficiary, or co-borrower. If you have a surviving spouse, they are allowed by the federal law to step in for the mortgage instead of fully paying the balance to the company. So long as they are financially able and credit-worthy.
You must keep in mind that your successor will only inherit your home's title and not its mortgage. There isn't any personal obligation to the successor to pay for the loans until the inheritor completes the assumption process. 

The Difference Between an Heir and an Executor
The difference between the two is that only one is authorized to decide on final decisions related to an estate.

The heirs are the monetary successors under the will. However, they lack any authority over asset sales and the estate. These individuals are mostly members of the family that were included in the list of beneficiaries.

An executor designates to dispense the estate and ensures that the dwelling property rightfully goes to the heirs. Because the executor holds much authority, they can discuss with the heirs regarding the property and asset sales, although they aren't obliged to do so. They also have the power to make final decisions that concern the estate.

Who Has Authority?
To organize your plans better, make sure to write everything down. It also helps you from forgetting any important details. Once you've started to systematize your will, you can guarantee that your home will be passed down to a relative or heir. You can also choose a designated executor to make all the decision making for you. However, the executor is still not liable for the given loan until the assumption process is finished.

That is why communication is vital to who will be the executor of your property. Make sure your discussion with them, along with your beneficiary, is open and honest to make sure all intentions are mentioned. Additionally, let them know where to find your mortgage documents.

Aside from your mortgage, you may leave behind the other debts that your family will probably have to shoulder. Get mortgage protection now and ensure that your mortgage payments are covered in full! Save your family the trouble of bearing your loans.

At Rigel Hines and Associates, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (708) 283-7316 or Click Here to request a free quote.