The mortgage is typically the largest debt that most people accumulate during their lives. When you have a mortgage debt, you may be wondering what will happen to it if you die before paying it off. What happens to your mortgage when you die depends on your estate-planning choices and whether you have any beneficiaries.

By: Luke Arthur on eHow

Joint Ownership

One of the most common scenarios involves joint ownership of the property, whereby you own the property with your spouse or with someone else. When you die, the property ownership simply transfers to the surviving owner. This person will be responsible for the mortgage debt. This could place a large financial hardship on a surviving owner who does not have an income.

Probate Process

If you do not own the property jointly with anyone else and you have a will, the property will be passed on to the beneficiary that you name in your will. In this case, the mortgage debt has to be paid out of any assets that remain in your estate. Before your beneficiaries can receive anything, all the debts in your estate have to be paid. This may require selling some of your possessions, including your house, to pay off the debt. 


Your beneficiary can decide to refinance the mortgage and take over payments. Refinancing occurs when your beneficiary does not want to lose the property but there are not enough assets in the estate to pay off the loan .The beneficiary takes out a new mortgage and uses that money to pay off the existing loan. Your name is replaced by your beneficiary’s name on the new loan.

Life Insurance

You can purchase a term life insurance policy that will last for the same length of time as your mortgage debt. If you die before paying off the balance, the life insurance policy pays a lump-sum benefit to your beneficiaries. They can then use the money to pay off the mortgage and take possession of the house.

Read more: What Happens to a Mortgage After Someone Dies? | eHow