{"id":7881,"date":"2026-11-08T23:48:18","date_gmt":"2026-11-09T04:48:18","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=7881"},"modified":"2026-11-08T23:48:19","modified_gmt":"2026-11-09T04:48:19","slug":"ill-leave-my-deed-to-my-adult-child-what-about-my-low-interest-mortgage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/ill-leave-my-deed-to-my-adult-child-what-about-my-low-interest-mortgage\/","title":{"rendered":"I\u2019ll Leave My Deed to My Adult Child. What About My Low-Interest Mortgage?"},"content":{"rendered":"\n
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You hold a deed. You wrote a will.<\/a> You left your home in the will to your adult child. You\u2019re feeling pretty good about your simple, straightforward estate plan. The only thing you\u2019re wondering about is the mortgage.<\/p>\n\n\n\n

You could try to pay off the balance, but should you? You have a very low interest rate. So, rather than putting your money into a final payoff, you\u2019d rather keep the funds in investment accounts.<\/p>\n\n\n\n

If you pass away with the mortgage still on the home, will your named beneficiary get a chance to keep your very attractive mortgage loan in place?<\/p>\n\n\n\n\n\n\n\n

Your Adult Child Can Inherit Your Home\u2014With Your Mortgage  <\/h2>\n\n\n\n

Many parents decide to bequeath their deeds through a will or trust because doing this provides tax benefits. Heirs receive a step-up in cost basis, which means their capital gains tax can be significantly reduced if they decide to sell the home.<\/p>\n\n\n\n

If you have questions about how your child\u2019s situation will be handled by the mortgage company, it\u2019s a good idea to call the company and get answers. Just know that under federal law, your adult child can have the home and also continue paying your mortgage.<\/p>\n\n\n\n

Your child needs to know that the mortgage won\u2019t be forgiven just because you have passed. But if you have a nice, low interest rate, your child gets to keep that rate. It will not be marked up to the prevailing rate at the time of your passing.<\/p>\n\n\n\n

This is because your adult child is recognized as a successor in interest<\/em> to the loan.<\/p>\n\n\n\n

This is not the same thing as assuming<\/em> the loan. If your child wants to assume the loan, that\u2019s a matter for discussion with the bank.<\/p>\n\n\n\n

Reverse mortgages are different. They come due at the borrower\u2019s death. If you take out a reverse mortgage, prepare your beneficiary for the reality that they\u2019ll need to resolve your loan\u2014normally within<\/em><\/strong> six months to one year<\/em><\/strong><\/a>.<\/em><\/strong><\/em><\/strong><\/p>\n\n\n\n

Tell Your Child About the Law That Lets Your Loan Live On\u2014After You\u2019re No Longer Here to Repay It<\/h2>\n\n\n\n

Lenders include a due-on-sale<\/em> clause in their home loans. Once the name on the title changes, the mortgage lender can demand full repayment. But there are safeguards in place for relatives when a mortgage borrower dies. If the title transfers to a beneficiary, the lender is required to communicate with that person. In fact, a 1982 law called the Garn-St. Germain Depository Institutions Act<\/em> directs your mortgage lender to leave the loan intact if your immediate family member will get the home when you pass away.<\/p>\n\n\n\n

Let your beneficiary know that the loan servicer will promptly need a copy of the death certificate (and possibly your will or the probate court\u2019s order).<\/p>\n\n\n\n

Your adult child should:<\/p>\n\n\n\n