If my late father told me not to get stuck with his debt, what can I do about his house if it has a mortgage on it?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
If my late father told me not to get stuck with his debt, what can I do about his house if it has a mortgage on it?
He recently passed away.
Asked on August 19, 2018 under Estate Planning, Maryland
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
You are not personally responsible for the debt--the house can be foreclosed on, if it is not paid, but you do not have to pay any of your personal money for it (unless you co-signed or guaranteed the debt, but you do not indicate that you did). Therefore:
1) If the house is worth more than the mortgage on it and you can pay it off, pay it off--that way you can keep the house, sell it for more than you paid on the mortgage, and make a profit.
2) If the house is worth same or less than the mortgage, let the bank take it.
You also, of couse, have to factor in other costs, like if you need to renovate, and the carrying costs until you can sell it. Example: house has $150k left on the mortgage, needs $35k of repairs to really be marketable, and will take 6 months to fix up and sell, during which you will pay $6,000 in taxes, utilities, etc. Therefore, to be able to sell the house means putting $191k into, and when you sell it, you have to pay 6% to a realtor.
a) If the house is worth (after fixing up) solidly more than $250k, it's worth doing this (including paying the mortgage, assuming you can)--you should come out ahead.
b) If it's worth around $205k or so, you're break even; there's really no reason to do try to fix it up and sell it, unless you feel like you are in a strong housing market and may get an offer for more than it *should* be worth.
c) If it's worth $200k or less, let the bank take it.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.