I Just Inherited a Home, But the Mortgage Company Won’t Let Me Switch the Loan to My Name?

When you inherit a home attached to a mortgage that has not been paid in full, you'll have to confront some tricky legal issues. Unless you sign the home loan's promissory note, you won't be considered the primary mortgage holder. Many mortgages come with a "Due on Sale" clause that demands the full payment of the loan's outstanding balance before the property can be transferred.

Although most states' property laws distinguish between the commercial sale of real property and the inheritance process, some lenders can be inflexible on this point. Your new home's mortgage issuer may argue that the loan was intended only for the deceased borrower. If you're unable to pay off the loan upon receipt of the property, they may demand that you refinance it. If you have mediocre or poor credit, the loan's effective rate may increase substantially during the refinancing process.

If you feel that your claim to the home is jeopardized by your new mortgage lender's hard line, you may strengthen it by continuing to make the payments on the existing loan. As long as the mortgage remains current, it's unlikely that the lender will attempt to seize the home. You may still be encouraged to submit to a credit check to facilitate the refinancing of the loan. At your earliest possible convenience, be sure to provide your new mortgage lender with your contact information.

You should also attempt to put your name on the home's title deed. Having your name on the deed will make it easier for you to refinance the loan at a favorable rate or apply for an entirely new mortgage. Depending upon the laws where you live, this may be difficult. It's likely that you'll need a valid notarized copy of your deceased relative's will or a clear common-law justification for assuming ownership of the house.

If you're using a will to prove your claim to the property, the document will need to state clearly that you are its sole inheritor. You'll need to show this will to the proper officials to ensure that the deed is entered in your name. If your marriage to the deceased party entitles you to inherit the property, you'll need to prove that this relationship is valid. Once you do, the name on the deed will be changed and you'll be able to refinance the home's existing mortgage or obtain a new credit facility.

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