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do banks ever reduce the principal so the beneficiary can pay off the mortgage when the owner dies?

do banks ever reduce the principal so the beneficiary can pay off the mortgage when the owner dies?

My husband died in 2013 and I have been making the payments on our house while waiting for the estate to close. The house is in his name only, he bought it before we were married, and it has a $275,000 mortgage on it. I am the sole beneficiary of the estate.

The payments are large and I have been making them out of the life insurance money. I have enough money to pay it off, but it is a huge chunk, and I have a developmentally disabled child who I would like to save some of the insurance as well as retirement. I do want to keep the house as it has some equity.

My question is, I have read that some banks will reduce the principal in certain situations. How would I go about trying to get this done? The loan was modified a couple of years ago and I'm not paying interest on $38,000 of it as a result, but I'm paying 6.9 percent on the rest, so the payment is hefty. The attorney, who isn't much help, tells me he will close the estate in the next two months,and I understand then the house can be put in my name.


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Anonymous (not verified)
24-07-2014

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I doubt that a bank will do this but you could ask I would NOT let them know you have enough to cover the entire amount rather ask them if you can pay for less than owed  There is some incentive for the bank to get the loan off of their books so they may work with you I would not count on it  You could, after getting it into your name, do a new loan in your name - you could pay off whatever amount you wanted (or needed to for qualifying) by doing this you stretch the remaining portion out over 30 years and make the payment a lot lower in the process   Good Luck Brian Barnes ENG Lending  Nationwide Lender

brian1 | Asked on 2014-07-24

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