What happens to the mortgage when someone inherits your home?

What happens to the mortgage when someone inherits your home?

Attorney Tom Olsen: Linda, you're on WDBO. Go ahead.

Linda: Hello. Thank you for taking my call. I've listened to you for years.

Attorney Tom Olsen: Thank you, Linda.

Linda: If you are elderly single, have a condo, have a will, therefore you have a beneficiary, but you die and you have a mortgage, and you still owe money on the mortgage. What if there's no money left in savings or your 401(k) to pay off the mortgage, what happens to your condo? Does it go to the lender when you die and you still owe money or does it go to your beneficiary?

Attorney Tom Olsen: No. It goes to your beneficiary subject to the mortgage. Your beneficiary would step into your shoes and keep on making mortgage payments until that mortgage has been paid off or your beneficiary sells the condo and pays the mortgage off.

Linda: Okay so the bank, does the mortgagee, the loan person, doesn't automatically get your condo?

Attorney Tom Olsen: No. Not at all.

Linda: It goes to your beneficiary?

Attorney Tom Olsen: It does. Now, I do want to qualify in saying that the lender can call the mortgage due if they wanted to or they may not. Usually, they don't, but they may call that due and that may require your beneficiary to either refinance and get their own mortgage, or again, sell the condo and pay off the mortgage.