Archive for Friday, April 6, 2007

Law can help heirs keep mortgage, too

April 6, 2007


Millions of Americans inherit property from their relatives every year, but many don't realize that a federal law can let them keep a home's low-rate mortgage, too.

Q: You recently wrote that federal law prevents a lender from automatically demanding that a mortgage be paid off immediately if one spouse dies but the other decides to remain in the home and continues to make the payments. My father died in 2002, but my mom didn't want to move out of their longtime home, so I moved back in with her to help. The bank agreed to put me on the mortgage so I could get the interest deductions. Mom passed away last month, and she left the house to me. The mortgage on the house has 25 years left, but has a very low fixed rate of 5 percent. Does the same law that protected my mom and her low-rate mortgage also protect me?

A: Yes, it should - as long as you meet the same requirements that your mother did after your father died five years ago.

Your situation is rather common. Every year millions of Americans inherit homes from their parents, and many would like to keep the property - as well as the existing, low-rate loan.

The federal Garn-St Germain Depository Institutions Act of 1982 essentially bans a lender from making a married couple's mortgage immediately due in one lump sum after one of the co-borrowers dies. The law basically says that the surviving spouse can remain in the home, as long as he or she continues to make the monthly payments in a timely manner and meets all the other terms of the original mortgage contract.

The same Garn-St Germain protection extends to most relatives, including the deceased's grown children. Like your mom, you can probably keep the house and its low-rate mortgage if you continue to live in the property and make the payments promptly. Consult a real estate attorney for more details.

Q: We purchased a vacant lot in a retirement area where there are a lot of log homes. We would like to build a log home ourselves, but we have no idea how to get started. Can you help?

A: Sure. Probably the best source of information about log homes is the nonprofit Log Homes Council, which represents more than 300 builders and manufacturers across the nation.

Its Web site,, provides lots of free consumer information about such homes and an easy-to-use locator to find a builder or manufacturer that works in your area and meets the group's fairly strict qualifying standards.

If you don't have access to the Internet, you can contact the organization to request free publications by calling (800) 368-5242 or by writing to Log Homes Council, 1201 15th St., Washington, D.C. 20005.


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