Q: My blood sister recently passed away intestate. Would I be able to assume her mortgage?
I live in Maryland so I know I would need to go through probate court. Our parents are deceased and she had no children. If granted by the judge would the lender just let me assume the mortgage or would the check my credit and make me refinance. I really want the house to stay in the family but I don't think I would be approved if I needed to refinance the home. I am able to pay her current mortgage. What is the process after you have been granted the property from the judge in probate court?
A: Actually, you would not need to assume the mortgage. There is a federal law called Garn St. Germain that allows you to retain the property as an inheritance without the lender accelerating the debt under its due on sale clause or performing any other underwriting. Obviously, each estate is fact dependent, so please double check with a qualified attorney before proceeding.
A: Yes, you can inherit real property “subject to” the existing mortgage and simply pay it according to its existing terms. The mortgage company cannot require an heir to refinance or become personally liable on the mortgage (although if you don’t pay they can still foreclose on the property). You will need to have a lawyer prepare a deed to transfer the property from the estate to you. This is a relatively inexpensive process, but by law the deed must be prepared by a lawyer. You will be executing a deed as PR of your sister's estate to you as sole heir. Then you simply make the mortgage payments. You should also notify the mortgage company of the estate transfer to you so that they update the name and address to mail the mortgage bill to.
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