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Inheriting a home can be a meaningful gift—but it also comes with obligations, especially if the property still has a mortgage. If you’re the beneficiary of a home in Georgia, you might be wondering:
- Do I have to pay off the mortgage immediately?
- Can I keep the house?
- What happens if I can’t afford the payments?
Here’s what you need to know if you’ve inherited real property that’s not fully paid off.
1. You Inherit the Property—Not the Debt
When someone leaves you a home in their will or trust, you become the legal owner of the property. But the mortgage doesn’t disappear. The lender still has a lien on the property, and monthly payments must continue—or the lender can foreclose.
Important distinction:
You don’t personally inherit the debt, but you inherit the responsibility of paying it if you want to keep the home.
2. You Can Usually Assume the Mortgage
Thanks to the federal Garn-St. Germain Act, most lenders can’t demand full repayment (a due-on-sale clause) just because the borrower has died. If you’re a family member inheriting the home, you’re typically allowed to:
- Take over the existing mortgage (even if your name isn’t on it)
- Keep making monthly payments
- Refinance in your own name (optional)
But you must still notify the lender and may need to provide a death certificate and proof of inheritance.
3. Know Your Options as the New Owner
Once you inherit a mortgaged property, you have several choices:
Option 1: Keep the Home
If you want to live in the house or hold it as a rental, you can:
- Continue paying the mortgage as-is
- Refinance into a new loan (especially if you want better terms or need to remove other heirs)
- Settle any taxes, insurance, or maintenance obligations
Option 2: Sell the Home
You can sell the home, pay off the mortgage, and keep the remaining proceeds. This is common when:
- Multiple heirs inherit the home together
- No one wants to live in the house
- The mortgage is too expensive to keep up
Just make sure all legal ownership and title issues are resolved before listing the property.
Option 3: Let It Go Into Foreclosure
If the mortgage exceeds the property’s value or no one wants the home, you can decline to assume the loan and let the lender foreclose. You won’t owe money, but this should be a last resort.
4. What If There Are Multiple Heirs?
Inheriting property jointly can complicate things:
- One heir might want to live in the home; another might want to sell.
- Everyone is responsible for property taxes and upkeep.
- The mortgage still needs to be paid—missed payments can hurt all parties.
Solutions:
- Agree to sell and split the proceeds.
- One heir buys out the others.
- Use a partition action if no agreement can be reached (court-ordered sale).
A strong estate plan can help prevent these conflicts by providing clear instructions.
5. Be Aware of Property Taxes and Insurance
Even if you assume the mortgage, you’re responsible for all ownership costs, including:
- Property taxes (which may increase after inheritance)
- Homeowner’s insurance
- Maintenance and utilities
Failing to keep up with these costs can result in penalties or loss of the home.
Talk to a Georgia Attorney Before Making Any Decisions
Inheriting real property with a mortgage brings both opportunity and risk. Before assuming a loan, refinancing, or selling, it’s wise to speak with an estate planning attorney.
At Hurban Law, LLC, we help Georgia families navigate property inheritance, resolve disputes between heirs, and protect their legal and financial interests. Whether you’re planning ahead or dealing with a recent inheritance, we’re here to guide you through every step.
Contact us today to make informed decisions about inherited real estate.
