Inherited a House With a Mortgage in Texas? What Heirs Should Know

Many inherited homes still have a mortgage. The good news is that the loan doesn't have to derail your plans. The key is knowing what to do first and keeping the payments on track.

The mortgage doesn't disappear

When the borrower dies, the loan stays attached to the home. Heirs generally aren't personally responsible for the debt, but if payments stop, the lender can eventually foreclose. That's why it's important to act early.

Contact the lender

Let the mortgage servicer know about the death and ask:

• What's the current payoff amount?
• Are payments current, and when is the next one due?
• What documents do you need from the family or estate?
• Who can receive information about the account?

Federal rules provide certain protections for heirs who inherit a home, including in some cases the ability to take over the loan. Your attorney can explain how those apply to you.

Keep it current if you can

If the plan is to sell, keeping payments current protects the home's equity and gives you time to sell on your terms. Some families split the payments; sometimes the estate covers them.

Selling an inherited home with a loan

When you sell, the mortgage is paid off at closing from the sale proceeds, and the remaining equity goes to the estate or heirs. A value estimate and payoff amount together tell you roughly what's left after the sale.

If the home is underwater

If the home is worth less than what's owed, talk with your attorney about options before making any decisions.

Selling an inherited home with a mortgage

Southern Luxe Group helps families compare payoff, equity and timing in Austin, Round Rock, Georgetown, Cedar Park and Bryan–College Station. Get a no-pressure plan for the property or call Trina at (512) 629-9050.

This article is general information, not legal advice. Please consult a Texas probate attorney about your situation.