# Home inheritence question **URL:** \ **Category:** In My Humble Opinion\ **Created:** [December 18, 2014, 12:30pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564 "2014-12-18T12:30:36Z")\ **Posts on this page:** 19\ **Page:** 2
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [December 19, 2014, 2:39pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/21 "2014-12-19T14:39:10Z")
> [@md2000](#): > > That was my thought - you can’t transfer title without satisfying the mortgages registered against the deed, I assume? That’s usually the case nowdays, but it depends upon the mortgage contract wording. > [@](#): > > If you die and the property is not in your name, then what? You mean, if you inherit property through right of survivorship and _then_ you die? IANAL, but if there is no contention or dispute, all we have here is a lot of paperwork to complete. In case of “termination of decedent’s interest,” a death certificate might be all that is needed. > [@](#): > > I thought the whole point of the estate was that it had to be wrapped up and settled, debts and all, in a timely manner. If the mortgage is still outstanding, can you close the estate? Because of the “right of survivorship” clause, the property owned by my mom and myself was _not_ a part of her estate, which is why we worded it that way in the first place, to avoid probate. She didn’t have to will it to me; I already owned it partially, which became totally upon her death. Filing of the notice in the Registrar of Deeds was merely a formality. You can set up living trusts to avoid probate, too. Some legal eagles recommend this, as probate can be expensive and time-consuming. Upon death, the trust’s (possibly secret) provisions automatically take over and probate is not a factor. This was used to my disadvantage when my grandmother died; she willed everything to me, but unbeknownst to both of us, she didn’t own anything. Her previously-deceased husband’s plans kicked in through living trust provisions and negated her will. I suspect state laws could be different and laws can change over time, so an attorney’s advice could be valuable here. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [December 19, 2014, 3:13pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/22 "2014-12-19T15:13:05Z")
> [@Henryunderborn](#): > > If my parents left me their house when they died, with a mortgage still on the house, and I have been found to have unsatisfactory credit, where I can’t get my own mortgage; what sort of complications / restrictions would come up for me receiving the house? > [@Fear\_Itself](#): > > If you can’t get a mortgage, it sounds like you have two options: 1. Pay off the existing mortgage in cash from your savings, and keep the house. 2. Sell the house and pay off the mortgage. The third option (which has been touched upon in this thread already) is to not take the house and let the bank take foreclose on it once enough payments have been missed and no one answers the phone. Of course, if he’s not upside down on the mortgage it would make more sense to sell it and take the cash, but if he owes more than it’s worth, it makes more sense to just let the bank take it back and not have anything to do with it. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 19, 2014, 3:36pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/23 "2014-12-19T15:36:01Z")
> [@bengangmo](#): > > Different jurisdictions have different rules, but where I am, it is not “life insurance” that you would be buying. > > Here, the bank will bundle “mortgage insurance” into you payments, renewing it automatically on an annual basis - if you don’t pay the insurance they will cancel your insurance. > > Recently a friend of ours had problems getting a mortgage because he wasn’t approved for this insurance (due to prior mental health issues). > > My father had the two year old mortgage on his house fully paid when my (part time working) mother died unexpectedly of a brain aneurism I’m not sure where you live- but where I live, this sort of “mortgage insurance” is usually only mandated by lenders until your equity reaches a certain percentage ( ususlly 20%). And people who aren’t required to have it don’t- if you wanted insurance to pay off your mortgage in case of your death/disabilty , life and disabilty insurance is a much better option. Because mortgage insurance (like the insurance offered on credit card balances) is insuring the lender, not you and will only pay the balance owed - even if you die just before making the last payment. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [December 19, 2014, 5:54pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/24 "2014-12-19T17:54:45Z")
> [@Joey\_P](#): > > The third option (which has been touched upon in this thread already) is to not take the house and let the bank take foreclose on it once enough payments have been missed and no one answers the phone. Of course, if he’s not upside down on the mortgage it would make more sense to sell it and take the cash, but if he owes more than it’s worth, it makes more sense to just let the bank take it back and not have anything to do with it. Maybe not. Banks can come after the estate or inheritors for losses, should they decide to do so; after all, they may be legitimate creditors. Better to negotiate with the bank first than take your lumps later. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [December 19, 2014, 6:32pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/25 "2014-12-19T18:32:20Z")
> [@Musicat](#): > > Maybe not. Banks can come after the estate or inheritors for losses, should they decide to do so; after all, they may be legitimate creditors. Better to negotiate with the bank first than take your lumps later. But just because dad’s will says “I’m giving you the house” doesn’t mean I have to take it. If I don’t sign anything, it’s not mine. I mean, if that was the case, right before I was ready to kick the bucket I’d take all the cash out of my house, gift it to my kids and will the house to someone I hate. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [December 19, 2014, 6:53pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/26 "2014-12-19T18:53:03Z")
> [@Musicat](#): > > That’s usually the case nowdays, but it depends upon the mortgage contract wording.You mean, if you inherit property through right of survivorship and _then_ you die? IANAL, but if there is no contention or dispute, all we have here is a lot of paperwork to complete. In case of “termination of decedent’s interest,” a death certificate might be all that is needed.Because of the “right of survivorship” clause, the property owned by my mom and myself was _not_ a part of her estate, which is why we worded it that way in the first place, to avoid probate. She didn’t have to will it to me; I already owned it partially, which became totally upon her death. Filing of the notice in the Registrar of Deeds was merely a formality. > > You can set up living trusts to avoid probate, too. Some legal eagles recommend this, as probate can be expensive and time-consuming. Upon death, the trust’s (possibly secret) provisions automatically take over and probate is not a factor. This was used to my disadvantage when my grandmother died; she willed everything to me, but unbeknownst to both of us, she didn’t own anything. Her previously-deceased husband’s plans kicked in through living trust provisions and negated her will. > > I suspect state laws could be different and laws can change over time, so an attorney’s advice could be valuable here. That works - but then, it’s not an inheritance, you already have title. I sort of question what happens then - when you buy the property and put several people on the title, does the mortgage company want to check credit for all of them? Can you add people to the title (effectively change ownership) without the mortgage company’s approval, after the purchase? > [@doreen](#): > > I’m not sure where you live- but where I live, this sort of “mortgage insurance” is usually only mandated by lenders until your equity reaches a certain percentage ( ususlly 20%). And people who aren’t required to have it don’t- if you wanted insurance to pay off your mortgage in case of your death/disabilty , life and disabilty insurance is a much better option. Because mortgage insurance (like the insurance offered on credit card balances) is insuring the lender, not you and will only pay the balance owed - even if you die just before making the last payment. I think we’re seeing a confusion of two different insurances. Mortgage Insurance - this is pretty much mandatory in Canada, and also I bet in the USA. This is not required if the down payment exceeds about 20%. It basically promises to pay the mortgage lender the difference between what was owed and what a foreclosed property auctioned/sold for. As a result, the bank’s risk is much lower. However, this insurance is typically paid in full during the purchase, so the only “mandatory” is that it must be purchased when a mortgage is lent. No ongoing payments, at least in Canada. Borrower insurance - this is offered to borrowers, whether mortgages, credit cards, etc. This insurance promises to make all remaining payments of the borrower dies; much like life insurance, but against a specific debt. Usually you can get better plain term insurance cheaper, independent of the lender. Rarely is this mandatory. It’s a good idea to have some sort of coverage if you have a dependent family - the last thing they need is that “daddy died, then the bank threw us out of our house”. For a senior citizen, the premiums likely exceed any benefit and all you’re doing is making the insurance company rich - you’re better off paying down the house (which should have been paid off already). Worst case you die with some money still owning and the kids don’t get the full $600,000 value of the house in their inheritance. I heard a business program about 20 years ago that suggested “add your grandfather to the mortgage”. Gramps dies in the next 10 years and you house gets paid off; but since then, they’ve added health assessments and age limits to these policies so that doesn’t work any more. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 19, 2014, 7:24pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/27 "2014-12-19T19:24:28Z")
> [@Musicat](#): > > Maybe not. Banks can come after the estate or inheritors for losses, should they decide to do so; after all, they may be legitimate creditors. Better to negotiate with the bank first than take your lumps later. Maybe the bank can come after the estate- assuming there’s anything other than the house in the estate. But they can’t go after the heirs - heirs don’t inherit debt. They can only inherit the house subject to any mortgages or liens, but the heirs never agreed to pay a loan and aren’t responsible for it. The only way an heir might have to make up a deficiency on a foreclosure is if s/he was a joint borrower/owner with the right of survivorship. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 19, 2014, 7:37pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/28 "2014-12-19T19:37:09Z")
> [@md2000](#): > > I think we’re seeing a confusion of two different insurances. > > Mortgage Insurance - this is pretty much mandatory in Canada, and also I bet in the USA. This is not required if the down payment exceeds about 20%. It basically promises to pay the mortgage lender the difference between what was owed and what a foreclosed property auctioned/sold for. As a result, the bank’s risk is much lower. However, this insurance is typically paid in full during the purchase, so the only “mandatory” is that it must be purchased when a mortgage is lent. No ongoing payments, at least in Canada. In the US, you generally make monthly payments - which makes sense as you can also generally drop it when your equity exceeds 20%. Depending on the market, that could be long before anyone would have expected on the date of the closing. You’re correct ,though, that I wasn’t clear enough about the two different types of insurance. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [December 19, 2014, 7:45pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/29 "2014-12-19T19:45:55Z")
PMI, which you might have to have with a small down payment, e.g., 10%, is _not_ the same thing as regular mortgage insurance. Two different things. It is a really good idea to get it off your mortgage as soon as possible (due to paying principal or getting a new appraisal if the value of your house goes up). Too many people continue to pay once the minimum is reached, giving the bank even more profit. Regular ole’ run of the mill mortgage insurance is just insurance that protects the bank that the owner pays. Which everyone from Clark Howard on down tells you is a bad idea. Paying premiums to insure someone else’s money is not in your best interest. (It’s far from the best bang for the buck as a result. Also the banks wins both ways. It gets the commission if it sets things up right.) The best thing is to get just plain life insurance if you want to have money to take care of such things. As to the OP, as recommended, people need to check into assuming the mortgage. In general, multiple people inheriting a house just causes a big mess. The easiest thing then is to sell the house right away and split the proceeds. The next is for one person to buy the others out. Anything else is asking for trouble. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [December 20, 2014, 7:01pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/30 "2014-12-20T19:01:28Z")
> [@md2000](#): > > That works - but then, it’s not an inheritance, you already have title. I sort of question what happens then - when you buy the property and put several people on the title, does the mortgage company want to check credit for all of them? The bank wants to be assured that their investment will be paid off. They would ideally be satisfied if only one of the buyers could handle the payments, but banks will usually take into consideration the credit available from all parties. When I bought the house with my mother, her retirement income was not adequate to pay a mortgage, but mine was. Perhaps the fact that I was quite younger than she was a factor, I don’t know; but we got the loan. > [@](#): > > Can you add people to the title (effectively change ownership) without the mortgage company’s approval, after the purchase? That’s a question I can’t answer, and may be determined by the bank’s policies. Logic would suggest that if their exposure and liability did not suffer, name changes would be OK, but many bank policies are not driven by logic, but tradition. > [@](#): > > I heard a business program about 20 years ago that suggested “add your grandfather to the mortgage”. Gramps dies in the next 10 years and you house gets paid off… I doubt if that would work. AFAIK, If one owner dies yet others remain, the insurance won’t kick in. > [@doreen](#): > > Maybe the bank can come after the estate- assuming there’s anything other than the house in the estate. But they can’t go after the heirs - heirs don’t inherit debt. They can only inherit the house subject to any mortgages or liens, but the heirs never agreed to pay a loan and aren’t responsible for it. The only way an heir might have to make up a deficiency on a foreclosure is if s/he was a joint borrower/owner with the right of survivorship. Very true. But what if you are planning on inheriting something from the estate, and by the time the estate is adjudicated, the assets have been drained for creditors? In the scenario where Dad has a house that’s over-mortgaged, my suggestion was to negotiate with the bank rather than taking your chances and letting them foreclose. The bank will be going after any assets the estate has, not just the one property. As potential inheritor, you could lose out. The foreclosure process alone will tack on major fees that the estate will be liable for. Best to avoid it if you can. It’s a last resort, not a first choice. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 20, 2014, 9:16pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/31 "2014-12-20T21:16:17Z")
> [@Musicat](#): > > The bank wants to be assured that their investment will be paid off. They would ideally be satisfied if only one of the buyers could handle the payments, but banks will usually take into consideration the credit available from all parties. My brother and his wife couldn’t get a mortgage together, but he was able to get one on his own. Apparently her income didn’t make up for her bad credit. > [@](#): > > Very true. But what if you are planning on inheriting something from the estate, and by the time the estate is adjudicated, the assets have been drained for creditors? In the scenario where Dad has a house that’s over-mortgaged, my suggestion was to negotiate with the bank rather than taking your chances and letting them foreclose. The bank will be going after any assets the estate has, not just the one property. As potential inheritor, you could lose out. That’s very different that “going after the heirs”, which you originally suggested could happen. If I am to inherit a house with a $100,000 dollar mortgage, I refuse the inheritance and the rest of the estate is only $5000, the heirs don’t have to make up the other $95 K. > [@](#): > > The foreclosure process alone will tack on major fees that the estate will be liable for. Best to avoid it if you can. It’s a last resort, not a first choice. All depends on the specifics. It would be silly to refuse a $500K house with a $5K balance on the mortgage and other assets worth $100K in the estate - better to pay the $5K and sell the house. Not so silly if it’s a $200K house with a $100K mortgage and other assets worth $5K \* since the bank is never going to settle for less than $5K. Somewhere in the middle it makes sense to negotiate with the bank, but not nearly always. - and yes, there are people like that - especially since things like life insurance and deferred compensation accounts don’t normally pass through the estate and aren’t available to creditors (unless the estate is the named beneficiary) ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [December 20, 2014, 9:39pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/32 "2014-12-20T21:39:09Z")
Some posters have commented that the bank could foreclose on the house, and if that isn’t enough to pay off the debt, then come after the estate for the deficiency. There are some states (and some provinces in Canada) where the bank cannot both foreclose and sue for the deficiency. If they foreclose, they can’t then sue. This is one of those issues where a person would have to consult a lawyer where the property is located to find out exactly what rights they have under a mortgage, and definitely not rely on comments from anonymous posters on a message board. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [December 20, 2014, 9:58pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/33 "2014-12-20T21:58:18Z")
> [@doreen](#): > > All depends on the specifics. It would be silly to refuse a $500K house with a $5K balance on the mortgage and other assets worth $100K in the estate - better to pay the $5K and sell the house. Not so silly if it’s a $200K house with a $100K mortgage and other assets worth $5K \* since the bank is never going to settle for less than $5K. Somewhere in the middle it makes sense to negotiate with the bank, but not nearly always. Umm… If you offered me a house that was really worth $200k but subject to a $100k mortgage, I would stifle my glee and demand that we close the deal right there and then before you changed your mind. I’m assuming that you mean the house’s current fair market value is $200k, not that it cost $200k at the height of the housing bubble or that you think it ought to be worth $200k. I would then sell the house for $200k, pay off the mortgage, and make a $100k profit (less expenses). It sounds like a great deal to me. If for some reason I had to pay off the $100k before taking ownership of the house, I would gladly do that – I’d still be ahead $100k. ---
**Author:** ![Colibri](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/colibri/32/1841_2.png) [@Colibri](https://boards.straightdope.com/u/Colibri)\ **Post date:** [December 20, 2014, 10:13pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/34 "2014-12-20T22:13:00Z")
Legal advice is best suited to IMHO. Colibri General Questions Moderator ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 20, 2014, 10:51pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/35 "2014-12-20T22:51:24Z")
> [@Alley\_Dweller](#): > > Umm… If you offered me a house that was really worth $200k but subject to a $100k mortgage, I would stifle my glee and demand that we close the deal right there and then before you changed your mind. > > I’m assuming that you mean the house’s current fair market value is $200k, not that it cost $200k at the height of the housing bubble or that you think it ought to be worth $200k. Actually, I meant a house that was currently worth $100K with a $200K mortgage- I don’t know how I read it so many times and didn’t catch the transposition. ---
**Author:** ![bengangmo](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@bengangmo](https://boards.straightdope.com/u/bengangmo)\ **Post date:** [December 22, 2014, 1:42am UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/36 "2014-12-22T01:42:34Z")
> [@Musicat](#): > > The bank wants to be assured that their investment will be paid off. They would ideally be satisfied if only one of the buyers could handle the payments, but banks will usually take into consideration the credit available from all parties. > > When I bought the house with my mother, her retirement income was not adequate to pay a mortgage, but mine was. Perhaps the fact that I was quite younger than she was a factor, I don’t know; but we got the loan.That’s a question I can’t answer, and may be determined by the bank’s policies. Logic would suggest that if their exposure and liability did not suffer, name changes would be OK, but many bank policies are not driven by logic, but tradition. > **I doubt if that would work. AFAIK, If one owner dies yet others remain, the insurance won’t kick in.** > > Very true. But what if you are planning on inheriting something from the estate, and by the time the estate is adjudicated, the assets have been drained for creditors? In the scenario where Dad has a house that’s over-mortgaged, my suggestion was to negotiate with the bank rather than taking your chances and letting them foreclose. The bank will be going after any assets the estate has, not just the one property. As potential inheritor, you could lose out. > > The foreclosure process alone will tack on major fees that the estate will be liable for. Best to avoid it if you can. It’s a last resort, not a first choice. The insurance my parents bought applied if either passed away - the house was fully paid. The insurance my wife and I have applies if either dies. ---
**Author:** ![bengangmo](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@bengangmo](https://boards.straightdope.com/u/bengangmo)\ **Post date:** [December 22, 2014, 1:47am UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/37 "2014-12-22T01:47:15Z")
> [@doreen](#): > > I’m not sure where you live- but where I live, this sort of “mortgage insurance” is usually only mandated by lenders until your equity reaches a certain percentage ( ususlly 20%). And people who aren’t required to have it don’t- if you wanted insurance to pay off your mortgage in case of your death/disabilty , life and disabilty insurance is a much better option. Because mortgage insurance (like the insurance offered on credit card balances) is insuring the lender, not you and will only pay the balance owed - even if you die just before making the last payment. Currently Singapore - the insurance is adjusted according to the outstanding balance. It is mandated by the bank for as long as there is a mortgage. We would buy it anyway though - it simply makes sense to me that should I pass away, my family doesn’t have to worry about the house ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [December 22, 2014, 2:29pm UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/38 "2014-12-22T14:29:11Z")
> [@bengangmo](#): > > The insurance my parents bought applied if either passed away - the house was fully paid. > > The insurance my wife and I have applies if either dies. I never heard that (but then I was never subject to that kind of insurance). I wonder if there are different policies? ---
**Author:** ![bengangmo](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@bengangmo](https://boards.straightdope.com/u/bengangmo)\ **Post date:** [December 23, 2014, 2:07am UTC](https://boards.straightdope.com/t/home-inheritence-question/707564/39 "2014-12-23T02:07:03Z")
> [@Musicat](#): > > I never heard that (but then I was never subject to that kind of insurance). I wonder if there are different policies? I’ve never looked into it in detail as 1. It is bank mandated 2. the cost is pretty inconsequential However, speaking for my parents - I have an inkling they opted to have both on the insurance For my wife and I, the mortgage is in both names, so the insurance is for both, I think the joint policy is around $60 per year (but our mortgage is pretty small at $60+k) [Previous page](https://boards.straightdope.com/t/home-inheritence-question/707564.md?page=1)