Your Mortgage Rights After a Spouse Passes Away

You have plenty on your plate after a spouse passes away. In this difficult time, the last thing you want to worry about is whether you’ll face foreclosure or be removed from the property you shared with your spouse.

Read on to learn more about what you can expect for your mortgage or home after a spouse passes away.

What Happens to Mortgage Debt When Someone Passes Away?

Mortgage debt doesn’t disappear just because someone passes away. Depending on the terms of the mortgage, including who else may be legally liable for the mortgage, the debt usually passes from one entity to another.

For example, say you and your spouse both have your names on the mortgage. If your spouse passes away, you assume the mortgage debt, just as you were responsible for it before.

What if You’re Not on the Mortgage?

Things get a bit more complicated if you are not on the mortgage. Say your spouse was the one who owned the home that you both lived in. Are you still responsible for the remaining mortgage debt?

Testate vs. Intestate Property Passing

If someone dies without a last will and testament, they died “intestate.” On the other hand, if a person dies with a last will, they have died “testate.”

In other words, if a person passes away and their will and testament explicitly state who will inherit the property, this will create a clear picture of who will have access to the property and mortgage.

Stipulations of the Deed

After your spouse passes away, the deed should go through the probate process. During probate, a will executor will read the last will and testament of your spouse and clearly state whether or not you take ownership of the mortgage and property.

If the deed says you get the house, you also get the mortgage debt. If the deed says that someone else gets the house, things may become complicated since you presumably were living in the property with the deceased.

Legal Protections Against Due-on-Sale Clauses

Many mortgage contracts have due-on-sale clauses. These clauses stipulate that upon the transfer of a home to another owner, the new owner must provide the full remaining payment for the mortgage balance. Otherwise, the new owner might face foreclosure.

To protect surviving spouses who receive ownership of a property, the federal government implemented the Garn-St. Germain Depository Institutions Act in 1982. It ensures mortgage lenders cannot invoke due-on-sale clauses after the death of a primary mortgage owner against the spouse.

So, if your spouse’s will leaves you the home you shared, you don’t have to pay the full remaining mortgage balance for the property right away. Instead, you’ll simply assume a similar mortgage contract and agreement with the original lender. This may provide you with some peace of mind.

Homestead Rights

But what if you aren’t on the will? Or, what if your spouse doesn’t name you the property owner?

In that case, you may still be able to live on the property, thanks to homestead rights. Homestead rights or exemptions ensure that surviving spouses have shelter or places to live after the death of their loved ones.

If you lived in the home with your spouse as your primary residence, you can remain in the property for the rest of your life; however, you may still need to make mortgage payments or otherwise assume responsibility for the mortgage debt. You also don't get homestead rights if you didn't previously live on the property with your spouse.

What if You’re Worried About Mortgage Payments?

Now you know your rights and privileges for your property as the surviving spouse. Although you may assume the property after your spouse is deceased, like many homeowners, you may feel the financial strain of maintaining the property alone. 

Many surviving spouses worry about making mortgage payments on time. For example, your spouse may have been the primary breadwinner with a higher-paying job. You might not be able to continue making mortgage payments, which could jeopardize your credit score and financial future.

Balance offers an alternative path to solving your financial difficulties. We will take out an equity investment in your property. In exchange, we’ll replace your mortgage with affordable monthly payments, allowing you to stay in your home and have a little extra financial breathing room.

You may receive a cash investment from Balance for our ownership interest, allowing you to cover debts, necessary home repairs, or other costs. You can also access a portion of your home equity, meaning you can request additional cash if necessary to avoid missing payments or taking on high-interest debt.

If you ever want to become the sole owner, you can buy us out of the equity we purchase whenever you like.

Contact Balance Today

Balance understands the challenges of tackling the financial cost of a spouse’s death. We can make the load easier to bear.

When you become a co-owner with Balance, you no longer have to worry about a pricey mortgage, and you can use your home's current equity to pay for things like funeral expenses and much more. Contact one of our representatives today to learn how we can help.


Mortgage Debt: Definition and Resources | North Carolina Bankruptcy Glossary

Testate vs. Intestate: Estate Planning | SmartAsset

Probate Process | American Bar Association

Homestead Exemptions: Definition and How It Works, With State List | Investopedia