What happens if you inherit a house with a mortgage?

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Inheriting a house can be both a blessing and a responsibility. If you find yourself in the position of inheriting a house with a mortgage, it’s essential to understand the implications and potential outcomes. This article will delve into what happens when you inherit a house with a mortgage, covering various aspects such as assuming the mortgage, refinancing options, and potential consequences.

Assuming the Mortgage

Assuming the mortgage means taking over the existing mortgage loan on the inherited property. In some cases, the lender may allow you to assume the mortgage without any changes, as long as you meet their requirements. This can be a straightforward option if the terms of the mortgage are favorable and you have the means to continue making the payments.

However, assuming a mortgage is not always possible or advisable. Some mortgages have due-on-sale clauses, which means that the lender can demand full repayment of the loan if the property ownership changes. In such cases, you may need to explore alternative options.

Refinancing the Mortgage

Refinancing the mortgage is another option when you inherit a house with a mortgage. This involves obtaining a new loan to pay off the existing mortgage. Refinancing can be beneficial if you can secure a lower interest rate or more favorable terms, potentially reducing your monthly payments.

Before refinancing, it’s crucial to assess your financial situation and eligibility for a new loan. Factors such as credit score, income, and the property’s value will influence your ability to refinance. Additionally, consider any costs associated with refinancing, such as closing fees and appraisal expenses.

Potential Consequences

Inheriting a house with a mortgage can have potential consequences, depending on the specific circumstances. Here are a few scenarios to consider:

1. Financial obligations: When you inherit a house with a mortgage, you become responsible for making the mortgage payments. Failing to make these payments can lead to foreclosure and damage your credit score.

2. Property taxes and insurance: In addition to the mortgage payments, you’ll also need to cover property taxes and insurance. Falling behind on these payments can have serious consequences, including tax liens and potential loss of coverage.

3. Equity considerations: If the inherited property has equity (the difference between the property’s value and the remaining mortgage balance), you’ll need to decide how to handle it. You may choose to sell the property and use the proceeds to pay off the mortgage or explore other options, such as renting it out.


Inheriting a house with a mortgage comes with its own set of challenges and considerations. Assuming the mortgage or refinancing are potential options to explore, depending on the circumstances and your financial situation. It’s crucial to understand the terms of the mortgage, assess your ability to make payments, and consider the potential consequences. Seeking professional advice from a mortgage lender or financial advisor can provide valuable guidance tailored to your specific situation.


– Bankrate: www.bankrate.com/mortgages/what-happens-when-you-inherit-a-mortgage/
– The Balance: www.thebalance.com/inheriting-a-mortgage-315692
– Investopedia: www.investopedia.com/articles/personal-finance/042015/what-happens-when-you-inherit-house-mortgage.asp