Your Mortgage Rights After the Death of a Spouse: What You Need to Know

The death of a loved one is difficult and emotionally draining. Uncertainty about your finances adds to the stress. Losing your home on top of everything feels overwhelming.

As a surviving spouse, federal and state laws offer protections. You can likely stay in your home and take over mortgage payments. We’ll walk you through who inherits the house and what happens to the mortgage. You’ll learn about your rights, options, and special considerations for reverse mortgages.

What Happens to Your Mortgage When Your Spouse Dies?

When your spouse dies, mortgage debt doesn’t disappear. Two key factors determine who pays the mortgage:

• Whether your spouse had a will or estate plan
• Whether you’re named as a co-borrower on the mortgage

A person who dies without a valid will dies intestate. You can die intestate if you never made a will. A court may also find your will legally invalid. The outcome makes a big difference in who inherits the house.

What Happens When Your Spouse Had a Will

A legally valid will probably specifies who inherits the house. Some wills direct the executor to pay off the mortgage using estate funds. The executor is the person appointed to carry out the will’s instructions.

Other estate planning documents can also determine who inherits the house. If the house is held in a trust, trust documents control inheritance. In some states, the deed contains language that controls ownership transfer.

These documents often allow surviving spouses to keep real estate out of probate. Probate is the legal process courts use to authenticate a will. Courts also use it to distribute estate assets.

What Happens When Your Spouse Died Without a Will

State law determines property transfer when someone dies intestate. Your state’s intestate succession laws determine which family members inherit the house. They also determine who inherits the rest of the estate.

In some states, the surviving spouse automatically inherits everything. You must have been legally married when your spouse died to qualify. In other states, property is divided between surviving spouse and children. Other heirs may also receive a share. Check your state’s laws to be sure.

Do You Inherit the Mortgage Along With the House?

Most of the time, inheriting the house means inheriting the mortgage. If you’re named as a co-borrower, you’ll inherit the mortgage responsibility. In most states, you must notify the lender about your spouse’s death. Beyond that notice, you don’t have to take action. The loan automatically becomes your responsibility.

One exception is mortgage life insurance. Our partner Solo can help you understand your options if you’re dealing with mortgage complications. Mortgage life insurance pays the outstanding balance if a borrower dies. Some mortgages require this protection insurance. You can also purchase a policy voluntarily.

Note that mortgage life insurance differs from private mortgage insurance. It also differs from ordinary life insurance. You aren’t required to use ordinary life insurance proceeds for mortgage payoff.

Inheriting a House Without Being on the Mortgage

What happens if you inherit a house but aren’t on the mortgage? You have options. The best choice depends on mortgage terms, home value, and your finances.

You might consider refinancing the mortgage in your name. A co-signer can help with this process. Another option is selling the house. You can use the proceeds to pay off the remaining balance.

In many cases, you have the right to stay in the house. You can take over the existing mortgage. Thanks to federal law, surviving spouses can assume a mortgage. You must meet certain criteria though.

Consider consulting a real estate attorney or financial advisor if you’re unsure. These professionals provide specific advice tailored to your situation. They help you make the best decision for your future.

Can the Lender Demand Full Payment Immediately?

Most mortgages contain a due-on-sale clause. Some people call it an acceleration clause. If the property is sold or transferred, the loan servicer may call in the loan. When a bank enforces this clause, the entire balance becomes due immediately.

If the bank doesn’t receive full payment, it can foreclose. Due-on-sale clauses exist to protect mortgage lenders’ rights. These provisions ordinarily prevent anyone from assuming the mortgage.

The Garn-St. Germain Depository Institutions Act of 1982 prevents enforcement in certain situations:

• When the borrower dies and ownership transfers to surviving joint owners. The borrower and co-owner(s) must have owned as joint tenants.
• When the borrower’s surviving spouse, child, or relative inherits the house. The relative(s) must live in the house after inheriting it.
• When the borrower transfers the house into a living trust. The borrower must continue living in the house.

Additional Protections for Surviving Spouses

If you inherit a home after your spouse’s death, laws provide additional protections. You won’t be forced out of your home. The Garn-St. Germain Act already prevents lenders from enforcing due-on-sale clauses. Other legal protections make it easier to stay home and manage the mortgage.

The Consumer Financial Protection Bureau (CFPB) enacted rules guaranteeing surviving spouses equal rights. These rights match those of the original borrower:

• The ability to assume the mortgage and take over payments
• The right to apply for a loan modification
• Access to loss mitigation options like forbearance or repayment plans

Many states also have laws offering additional safeguards for surviving spouses. These laws vary depending on where you live. They’re designed to help you stay in the home and navigate the process.

What Happens to a Reverse Mortgage After Your Spouse Dies?

A reverse mortgage is also called a Home Equity Conversion Mortgage (HECM). It’s available to homeowners at least 62 years old. They must own their homes outright or have substantial equity.

Unlike a traditional mortgage, a reverse mortgage pays you. The homeowner receives money as monthly payments, a lump sum, or credit line. The borrower isn’t required to make monthly payments on the loan.

Instead, the loan balance increases over time as payments are made. The homeowner’s equity in the house decreases. The reverse mortgage balance becomes due when:

• The homeowner sells the house
• The homeowner dies
• The homeowner moves out for more than 12 months

For surviving spouses, specific rules determine whether you can stay. They also determine whether you’ll need to repay the loan balance.

Co-Borrower vs. Non-Borrowing Spouse Rights

If your spouse had a reverse mortgage, your rights depend on your status. You were either listed as a co-borrower or a non-borrowing spouse.

If your name is listed as a co-borrower, you can continue living there. You can even keep receiving payments from the reverse mortgage. The loan doesn’t become due as long as you meet the terms. You must continue living in the home as your primary residence.

What Are a Non-Borrowing Spouse’s Rights?

If you weren’t a co-borrower, you’re considered a non-borrowing spouse. As a non-borrowing spouse, you may still have the right to stay. You won’t have to immediately repay the loan. You’ll need to meet certain Department of Housing and Urban Development (HUD) requirements:

• You were married when the reverse mortgage was made.
• If the loan was made on or after August 4, 2014, your name must be listed. You must be listed as a non-borrowing spouse on the documents.
• If your spouse had the reverse mortgage before marriage, you don’t qualify. However, you may still have rights as a surviving heir.
• You have lived in the home continuously since the loan was made. The house must be your primary residence. If you sell or move out for more than 12 months, the balance becomes due.
• You are current on property taxes and homeowners insurance. If you fall behind, the lender can require full repayment. The lender may also initiate foreclosure.
• You provide required documentation within 90 days of your spouse’s death. HUD requires you to notify the lender. You must provide proof that you meet non-borrowing spouse criteria.

What Happens If You Don’t Meet HUD Requirements?

If you don’t qualify as a surviving spouse under HUD’s rules, options exist. You may still remain in the home. You can try:

• Negotiating with the lender: You might work out an agreement to repay over time. Refinancing the balance is another possibility.
• Selling the house: If you can’t stay, you may sell it. The proceeds pay off the reverse mortgage balance. Any remaining money goes to you or the heirs.