Do I inherit Dad's home equity loan along with the house?

A fellow caregiver asked...

My father passed away about a month ago. To inherit the house I will need to go through probate court. He still owes $59,000 on the mortgage and $25,000 on a home equity line of credit (both from the same bank). If I were to inherit the house and continue to pay the mortgage would I have to continue to pay the home equity line of credit as well?

Expert Answer

Barbara Repa, a senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

Both the mortgage and the home equity line of credit are encumbrances"”and that word probably has a new feeling for you. They stay with the property as it changes ownership, and remain with it until satisfied. So, in short, you'll have to find a way to pay or satisfy both of these debts attached to the house.

Depending on whether your father left a will, how it was written, and what other assets he owned at death, it may be possible that some of his property or accounts could be used to help pay off the mortgage and line of credit, which functions the same as another mortgage on the property. If there's a will, pay special attention to how and whether it addresses paying debts, as that will be key.

Should you want to take over ownership of the house, it is probably an advantage that both debts are controlled by the same bank, as that may allow you more wiggle room in negotiating for favorable terms.

Since there's potentially a lot at stake here, you may want to consult an experienced financial advisor or real estate attorney before making any final decisions or attempting to negotiate with the bank.

In the meantime, you may find some valuable help at the Consumer Information section of the Federal Reserve System's website at