Estate Planning Question

[sweet angel]

If you leave someone a house (in a Will), but the house still has a mortgage on it, how does the person who receives it proceed? Obviously the Deed would be transferred from the Estate to the recipient, but I guess they'd have to refinance? What if they can't qualify for a loan, but can afford the current mortgage payment?

 

[The Mystery Machine]

If you leave someone a house (in a Will), but the house still has a mortgage on it, how does the person who receives it proceed? Obviously the Deed would be transferred from the Estate to the recipient, but I guess they'd have to refinance? What if they can't qualify for a loan, but can afford the current mortgage payment?

Well I guess they would have to sell it then.

 

[sweet angel]

Well I guess they would have to sell it then.

Probably, but it doesn't seem right.

Even if they COULD afford the current payment, but just not have the credit to qualify for a loan? That's just stupid! I wouldn't be leaving the house for them to sell...I'd be leaving it because I'd want them to be able to live in it.

 

[punkin]

Well, the Estate could stay in Probate and pay the mortgage until such time as either the heir is able to get a mortgage or until the Estate sells the house and can give proceeds to the heir.

 

[crazyme5kids]

Your best bet would be to speak with a lawyer that specializes in estate planning.

 

[The Mystery Machine]

Probably, but it doesn't seem right.

Even if they COULD afford the current payment, but just not have the credit to qualify for a loan? That's just stupid! I wouldn't be leaving the house for them to sell...I'd be leaving it because I'd want them to be able to live in it.

I know but they have to qualify for a loan to own it.

When you divorce if you want the house you have to refinance. How about that? You had already owned it and now you may not be able to.

 

[sweet angel]

Your best bet would be to speak with a lawyer that specializes in estate planning.

I work for lawyers and plan to ask on Monday -- it just popped into my head today.

MysteryMachine -- that's true. I never thought about that.

I'm just thinking that if something happens to me, my son, and my parents, I know who I'd want my stuff to go to, but all I really have is the house. I'd want that person to be able to live in it -- not have to sell it and just have the proceeds.

 

[The Mystery Machine]

I'm just thinking that if something happens to me, my son, and my parents, I know who I'd want my stuff to go to, but all I really have is the house. I'd want that person to be able to live in it -- not have to sell it and just have the proceeds.

You can establish a trust and that is what will protect your son financially.
A will is nice, but a trust is "show me the money".

We are currently doing our will and will establish trusts for our dd's.

 

[sweet angel]

You can establish a trust and that is what will protect your son financially.
A will is nice, but a trust is "show me the money".

We are currently doing our will and will establish trusts for our dd's.

No, no, no....this isn't about my son. My parents, my son, and I are all going on vacation together in a few weeks -- flying/cruising. That is my whole family. If something should happen to all four of us, I plan to leave my stuff (house, SUV, furnishings) to someone else...but I don't want it to have to be sold.

This person could afford to make the payments on my mortgage, but I don't know that he'd qualify on his own...although, who cares...I'll be dead then anyway.

 

[MrsToad]

No, no, no....this isn't about my son. My parents, my son, and I are all going on vacation together in a few weeks -- flying/cruising. That is my whole family. If something should happen to all four of us, I plan to leave my stuff (house, SUV, furnishings) to someone else...but I don't want it to have to be sold.

This person could afford to make the payments on my mortgage, but I don't know that he'd qualify on his own...although, who cares...I'll be dead then anyway.

I would also be interested in hearing a lawyer's answer - since there is a mortgage, the bank has part ownership so the property is not free to be given to anyone. Would the estate administrator have to sell the house, pay off the mortgage, and then give the remaining cash to the beneficiary? Or, can the beneficiary "buy" the house for the balance of the mortgage? Interesting question...

 

[sweet angel]

I'll let you know what I find out.

 

[figment52]

Probably, but it doesn't seem right.

Even if they COULD afford the current payment, but just not have the credit to qualify for a loan? That's just stupid! I wouldn't be leaving the house for them to sell...I'd be leaving it because I'd want them to be able to live in it.

You should buy insurance on the loan balance and then the loan would be paid upon your death.

 

[sweet angel]

You should buy insurance on the loan balance and then the loan would be paid upon your death.

I was told I don't need mortgage insurance as long as the value exceeds the loan amount.

I understand what you're saying though...it would keep the house from having to be sold.

 

[SillyMe]

I was told I don't need mortgage insurance as long as the value exceeds the loan amount.

I understand what you're saying though...it would keep the house from having to be sold.

Why wouldn't you need mortgage insurance? If you bought mortgage insurance or life insurance for the amount of the loan, then it would be paid off upon your death.

 

[sweet angel]

Why wouldn't you need mortgage insurance? If you bought mortgage insurance or life insurance for the amount of the loan, then it would be paid off upon your death.

I'm not sure. I was also told that life insurance is not really necessary as long as the value of the home exceeds my debt.

 

[golfgal]

Life Insurance would be a perfect solution in this case. You buy a term policy that goes for the life of the loan, 30 years or what ever naming the person that you are leaving the house to as the beneficiary, then if you die, he/she gets that money to pay off the mortgage and then can live in the house and not worry about a mortgage. Also, if you have dependents you SHOULD have life insurance in an amount that will cover his/her living expenses until they are old enough to pay for themselves, after college, etc. You should set up your policy naming your son as first beneficiary so if you die the money goes to him and he can stay in the house with what ever guardian you pick then name the other person as second beneficiary so if you and your son die, that person gets the money to pay off the mortgage.