Disclaimer: This is general information, not legal advice. I am not a lawyer. For advice about your specific situation, consult a licensed Alabama attorney or your local probate court.
Detailed Answer
When the person who borrowed money to buy a house dies, the mortgage does not automatically disappear. In Alabama, taking over the mortgage and the house involves two separate issues: getting legal ownership of the house (title) and getting the lender’s permission to become responsible for the loan (mortgage assumption or refinancing). You typically need to address both.
Here are the practical steps, explained in plain language, that people in Alabama normally follow:
- Confirm who owns the house now. Check the deed recorded at the county probate or land records office. Common ownership situations and how they affect transfer on death: joint owners with right of survivorship or tenancy by the entireties usually means the surviving owner gets title automatically. If the property was only in the decedent’s name, title generally passes under the will or under Alabama probate law if there is no will.
- Determine how title will transfer. Title can transfer by: (a) a recorded Transfer-on-Death deed or beneficiary designation if one was used, (b) survivorship rights, (c) probate administration (the executor or administrator transfers title), or (d) property held in a living trust. If probate is required, the executor or administrator will be responsible for distributing real property according to the will or intestacy laws.
- Notify the mortgage lender immediately. Lenders must be told of the borrower’s death. Ask the lender what documentation they need (typically a certified death certificate and proof of your legal authority over the estate such as Letters Testamentary or Letters of Administration). The lender will explain whether the loan is assumable, whether it must be paid in full on the borrower’s death, or whether they will allow a surviving person to continue making payments.
- Check whether the loan is assumable. Many conventional loans contain a “due-on-sale” or acceleration clause that allows the lender to call the full loan due if ownership changes. Some government-backed loans (FHA, VA) include more flexible assumption rules. If the lender allows an assumption, they will usually require you to qualify financially (credit, income) and will document the change. If the lender will not allow assumption, you can often keep paying the mortgage if you have title or are the estate’s representative, but the lender retains the right to enforce terms if payments lapse.
- If assumption is not possible, refinance. If the lender won’t permit a direct assumption or the required terms are unacceptable, a common route is to refinance the loan into your name. That requires qualifying under current lending standards and paying closing costs.
- Complete the title transfer through probate or other process. If you need legal title to the house (for example, to refinance), you will typically get it through probate if the decedent did not leave a trust or a transfer-on-death document and no joint owner exists. The probate court will issue Letters Testamentary/Letters of Administration to the executor or administrator who can then transfer title by deed to the beneficiary or heir.
- Provide the lender the right documents once you have estate authority or title. Lenders commonly require: certified death certificate, recorded deed showing the new owner, letters or proof of appointment from probate (if you are acting for the estate), and proof of ability to pay (if they require assumption underwriting).
- Protect the property while matters are resolved. Continue making mortgage payments if possible to avoid foreclosure. Make sure insurance remains in force and property taxes are paid. If you cannot make payments, contact the lender early to discuss options (loss mitigation, loan modification, short sale, deed in lieu).
Timeframes and requirements vary depending on local county procedures, whether a will or trust exists, the mortgage type, and the lender’s policies. The Alabama Judicial System has general information about probate courts and how to open an estate at the state court website: https://www.alacourt.gov/. For federal guidance about mortgages and borrower death, the Consumer Financial Protection Bureau explains steps lenders and families should take: https://www.consumerfinance.gov/. For rules about FHA and VA loans and assumptions, check the federal housing sites (HUD and VA) or ask the lender which program underlies the loan.
Helpful Hints
- Start with the deed and the mortgage documents. The deed tells who owns the house now. The mortgage note and mortgage/security instrument tell whether the loan may be assumed or accelerated.
- Request several certified copies of the death certificate from the county probate office right away; lenders and other parties often require certified copies.
- If the decedent left a will, locate it and file it with the probate court. If there is a trust, get the trustee involved—trust property usually avoids probate.
- Contact the lender early and ask for their written instructions about what they need to consider an assumption or transfer. Lenders often have internal forms for borrower death and assumption requests.
- Keep proofs of payment (bank records, canceled checks) and maintain homeowner’s insurance and property tax payments while the estate is being settled.
- If you plan to refinance, get prequalified before initiating a title transfer so you know what you can afford and whether refinancing is realistic.
- If multiple heirs will share the property, get agreements in writing (buyout, co-ownership, sale plan). Disputes among heirs can delay or block a clean title transfer.
- Consult an Alabama probate or real estate attorney if: there is no will, multiple heirs disagree, the lender threatens acceleration, or the estate is complex. An attorney can explain local probate rules, prepare deeds, and negotiate with lenders.
- Search for local low-cost or free legal help if money is tight. The Alabama State Bar and local legal aid organizations can point you to services.
Keep in mind: title (ownership) and the mortgage (loan) are separate legal matters. Getting title does not automatically transfer the lender’s claim. Lenders generally must consent for you to assume an existing loan, or you must refinance to place the loan in your name.
For specific procedure and forms, contact the probate court in the county where the property is located or consult a licensed Alabama attorney.