Home loans – Who pays them in the event of your death?

home loan attorneysThere are a lot of questions that are very practical for real life and do cross our minds but we don’t know where to seek the answers for them. One such question is if you have a home loan on your name, what happens in case of your death. Simply putting, the loan will get transferred to the co-applicant or the legal heirs that you have. Thus it should be your prerogative to save your family from repayment problems by getting insurance on the loan. Here are some situations that you can encounter that are explained here in United Finance.

Loans of single people:

In case you are single, the debts that you have will not pass to your family members the way it is with your assets. However, before the assets that you have left passes onto the beneficiaries that you have designated the home loan that you have has to be settled by your estate. This means that whoever has the authority to administer your estate will see that the home loan you have is paid off using your savings and the proceeds of your life insurance. In case the mortgage is cleared, the house passes on to your beneficiaries. An alternative also exists. The administrator can sell off the house and clear your mortgage and the remaining proceedings would go to your beneficiaries.

Loans of married people with joint ownership:

In the situation that you are married and you own the house jointly with your spouse the mortgage and the house will solely pass onto your spouse. This functions just like your bank account, in the event of death of one owner, the other becomes the singular owner. It is same when it comes to co-signers. There are a number of young families who have a limited credit history and they generally have their parents co-sign on their mortgage for them to get a better rate. In this case if both you and your spouse pass away the mortgage falls as a burden on your parents.

Loans of married people with single ownership:

A third situation is if you are married but are the sole owner of your home. You may have purchased the house before your marriage and hadn’t updated the deed. In such a case the fate of the house depends upon what the estate plan says. If there is no estate plan then your house passes on to your spouse but only when the home loan has been paid off completely. It is always better to jointly title the house as it simplifies a lot of legal proceedings. The only time this is not a good idea is when the house is considerably under water and you don’t want your spouse to face that burden. This is a complex legal issue and you should consult a mortgage attorney before taking any final decision.

Marie is an accomplished financial consultant writing about socio-economic problems as well as legal and financial articles in many websites. Her knowledge about reputable money loans online is undoubtedly one of the best.