What happens to my mortgage if I die before paying it off?

Mortgage payments will still need to be made, and that responsibility will fall to the cosigner or co-borrower on the loan, if there is one. Failing that, whoever inherits the home will likely be responsible for continuing to make payments.

If you had mortgage protection insurance (MPI), it should cover the principal and interest payments for your loan, with the money going directly to your lender. (Note that MPI is different from private mortgage insurance — PMI — which is insurance for the lender; many borrowers are required to get PMI if they’re buying a home with a down payment of less than 20%.)

If the lender doesn’t receive its regular payments, it may foreclose on the property. That’s because a mortgage is a type of “secured” loan, in this case secured by the property.

But often, a home is sold anyway when its owners have passed away — to pay off debts or because no one wants to or can keep the home.I

t’s smart to make your wishes clear in a will regarding who should inherit your home when you die. An estate lawyer can help you not only with your home, but also with how to minimize taxes and best pass on your assets. – Motley Fool