Inheriting a Mortgage

[jazz4cash]

I was wondering what would happen if DW and I leave our mortgaged home to our children. Would they need to get a new more expensive mortgage or just keep paying on the existing mortgage which features the lowest rates in a lifetime?

I was pleasantly surprised to see several references to a law that permits the mortgage terms to be passed on to the heirs. Some descriptions specify "adult children of deceased" but some simply say relatives.

The Inheritor’s Rights
Someone who inherits real estate that’s subject to a mortgage generally inherits the mortgage as well. The new owner can simply take over the old mortgage, without any change in terms. This is possible because of a federal law known as the Garn-St. Germain Depository Institutions Act of 1982. (12 U.S.C. section 1701J-3)

https://www.alllaw.com/articles/nol.... Germain Depository Institutions Act of 1982.

Does anyone have 1st hand experience with this law? Do mortgage companies balk or try to trick the heir into taking out a new mortgage, charge a fee to re-title the loan or impose some other hardship?

 

[Rustic23]

I’ll bet this varies by state and company.

 

[Another Reader]

That is for owner-occupied properties with Fannie/Freddie loans. It's a "no qualifying" loan assumption. If you rent the property out, you have to meet the federal guldelines and the servicing company overlay to assume the loan. That's an assumption with qualifying.

 

[jazz4cash]

I’ll bet this varies by state and company.

I believe it's federal law.
Garn-St. Germain Depository Institutions Act of 1982. (12 U.S.C. section 1701J-3