Should I Inform the Mortgage Lender that My Spouse has died?
At the time, it may feel like you are the only one facing this situation, but I assure you that the question has crossed more minds than you realize. The short answer is “yes”, the mortgage lender needs to know even if you’ve been making timely payments since their passing… Let me explain why.
Let’s suppose a situation has come up where you may need to or want to sell your home. During a title search, all the owners are named. This is why an attorney, during probate, makes a “public notice” and files it with the court and also has it printed in the newspaper or some other legal document. The same can be said if the property was left to you by a parent.
If the representative for the bank or lender is a “stickler for the rules” (…and they are) they could construe this as a fraud for not reporting it. Why do you ask? The underlying reason is that the “terms” of the agreement have changed”. Some lenders may be more lenient than others, but for the most part, they follow the rules. The banks don’t want your property and they certainly don’t need any more default property clouding their books… Instead, they may be more receptive to an “Assumption”. These types of loans are not as popular as they once were… but under these circumstances, it might be an alternative. They are more concerned about some of the more “creative financing” that an investor might offer you if you decided to sell through one of their strategies.
Another reason to consider notifying the lender is that if the deceased spouse had mortgage protection insurance… the note could literally be “paid in full”… depending on the terms and amount of coverage. There are other reasons that notice should be given that could involve annuities, IRAs, surviving heirs from another marriage, and so on. Certainly, there is a lot to consider…
Nothing is suggesting that you will have to sell your home, but it’s in your best interest to have the necessary paperwork in order, should anything present itself while discussing your situation. Having a good tax account and estate planning attorney can prove to be very helpful.
For a personal consultation in the DFW metro area, click on the “CONTACT” button at the top of this page. Thanks for taking the time to read this…