Question regarding estate and parents being upside down on mortgage
Question Details: My parents (in their late 70's) purchased a condo co-op in a retirement community at the top of the market (SoCal) and are now probably upside down by $80K. They have an interest only loan for about $320K. If they pass away does the difference come out of their estate when the place is sold?
Yes, the loan would have to be paid off, from other assets of the estate if necessary, before any distribution under a will or to heirs at law. The same is true, of course, of any legitimate debt that is owed by a deceased person. However, the debt does not pass under the will or to the heirs, ordinarily, with exceptions sometimes being made for something like a car that has a loan balance secured by the car.
Let's hope your parents go on living healthy and happy lives. The market won't stay this low forever.
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