Would the bank require you to refinance an inherited house?

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Would the bank require you to refinance an inherited house?

Asked on May 30, 2012 under Real Estate Law, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Unless a mortgage has what is known as an "acceleration clause" (i.e. a clause that states that the mortgage becomes immediately due and payable upon the death of the mortgagor), the lender is typically required to continue to accept monthly payments by the beneficary until the maturity date. This benefits the person who is inheriting since they do not have to go through the lender's application process and qualify for the mortgage.
 
Typically an acceleration clause is a provision in a mortgage that allows the lender to demand immediate payment in full of the remaining balance of the mortgage if certain events occur (such as the sale of the property,  late payments, or the refinance of the mortgage loan). As a practical matter, it is unusual to find such a clause that provides for acceleration upon the death of the property owner.
 
So absent such a clause, just keep making timely mortgage payments and you should be fine.


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