Mom's House Has a 3% Mortgage and an Insurance Clock. Here's What Illinois Heirs Should Do First.
A plain-English guide to inheriting a house in Chicago and the suburbs: what to do in the first few weeks, what to leave alone, and how to decide whether to keep, rent or sell.
Nobody plans to become a real estate decision-maker at a funeral. But that's how it usually happens. A parent, grandparent or relative passes away, and suddenly a family is holding the keys to a house in Oak Lawn, Arlington Heights, Bridgeport or Naperville, along with a pile of questions nobody has answered before.
I've been selling homes across Chicagoland for 25 years, and many of the hardest calls I get start with "We just lost Dad, and we don't know what to do with the house." The good news: most of the expensive mistakes happen because things are done in the wrong order, not because the family did anything wrong. Here's the order that tends to work.
The short version:
Secure the house and call the insurance company.
Figure out how the house is titled (will, trust, transfer-on-death, or nothing at all).
Check what kind of mortgage is on it. It might be worth keeping.
Get a value as of the date of death and save it.
Keep the property tax bills paid and expect exemptions to change.
Only then decide: keep it, rent it or sell it.
I'm a real estate broker, not a lawyer or accountant. This is general information to help you ask better questions. Your estate attorney and tax preparer have the final word on your situation.
Step 1: Lock it down and call the insurance company
This is the one most families skip, and it can be the most expensive.
Homeowners insurance is written for a house where someone lives. When a house sits empty, many policies start cutting back coverage after a set number of days. Illinois law sets a floor for fire coverage: the state's standard fire policy only lets an insurer exclude fire losses once a building has been vacant or unoccupied for more than 60 days in a row. But other coverage, like vandalism, theft or burst pipes, can be limited sooner depending on the policy, and 30 days is common.
In plain terms: an empty house heading into a Chicago winter is a real risk. A frozen pipe in January is one of the most common ways an inherited house loses value fast.
What to do this week:
Call the insurance company, tell them the owner has passed away, and ask exactly how long the house can sit empty before coverage changes.
Ask about a "vacancy permit" or vacant-home policy if nobody will be living there.
Keep the heat on (set it no lower than the mid-50s), keep the utilities active and have someone check the house regularly.
Change the locks if you don't know who has keys, and stop mail delivery.
If it's going to sit empty for a while, read my earlier post on vacant homes and Illinois' squatter law. It applies to inherited homes too.
Step 2: Find out how the house is titled
Before anyone can sell, rent or refinance the house, you need to know who legally owns it now. In Illinois, it usually falls into one of these buckets:
How it was set up | What usually happens |
In a living trust | The trustee named in the trust handles it. Usually no probate court needed. |
Transfer on Death Instrument (TODI) | The house passes straight to the named person without probate. Since 2022, Illinois allows this for any type of real estate, but it only works if it was signed and recorded before the owner died. |
Joint tenancy with a surviving owner | The surviving co-owner typically owns it outright. |
Only in the deceased person's name (with or without a will) | It almost always goes through probate court. |
A common myth: "The estate is small, so we can skip probate with an affidavit." Illinois did raise its small estate affidavit limit to $150,000 as of August 15, 2025, but that shortcut does not cover real estate. If the house was only in the deceased person's name, the family generally needs to open a probate estate, no matter how modest the house is.
What probate looks like in plain English:
A judge appoints an executor (if there's a will) or an administrator (if there isn't). That person gets a court document called Letters of Office. Title companies and buyers' attorneys will ask to see it.
Most Illinois estates use "independent administration," which generally lets the executor sell the house without asking the judge for permission each step of the way.
Creditors get at least six months from the first published notice to file claims. The money from a sale typically stays in the estate until those claims are handled.
A straightforward Cook County estate often takes roughly 9 to 12 months from start to finish.
The takeaway: you can often sell the house during probate. You usually just can't hand out all the money until the estate is ready to close.
Step 3: Check the mortgage. It might be worth more than you think.
This is where the headline comes from. There are two very different situations.
A regular mortgage
Many families assume the bank will demand the whole loan back the moment the owner dies. Usually, it can't. A federal law from 1982, the Garn-St Germain Act, stops lenders from calling the loan due just because a home with fewer than five units passed to a relative after the borrower's death. Federal rules also require the loan servicer to work with the heir as a "successor in interest" once they confirm who you are and that you own the property.
Why that matters right now: mortgage rates hit 7.40% on October 8 (Freddie Mac), the highest since November 2023. If Mom refinanced back in 2021, she may have a rate around 3%.
Example | Monthly payment (principal and interest) |
Mom's $300,000 loan taken in 2021 at 3.00% for 30 years | About $1,265 |
Remaining balance today (about 5 years in) | About $266,700 |
Borrowing that same $266,700 today at 7.40% for 30 years | About $1,847 |
Difference | About $582 a month |
Illustration only. Taxes and insurance are not included. Your numbers will differ.
That doesn't mean keeping the house is the right call for every family. But it's worth knowing before anyone lets the loan lapse into default. Keep making payments while you decide, and call the servicer early.
A reverse mortgage
This is a completely different clock. With the most common type (an FHA-insured HECM), the loan becomes due when the borrower passes away. According to the federal consumer agency, heirs generally get about 30 days from the lender's notice to say what they plan to do, and the timeline can sometimes be extended to around six months to sell or refinance, with extra extensions possible in some cases.
The good news: if the loan balance is higher than the house is worth, heirs who sell generally won't owe more than 95% of the appraised value. Mortgage insurance covers the rest. But don't ignore the letters. Respond quickly.
Step 4: Get a value as of the date of death, and keep it
This step can save the family a lot of tax.
When you inherit a house, federal tax law generally resets its "cost" to what it was worth on the date the owner died. This is called a step-up in basis.
Simple example: Mom bought the house in 1985 for $90,000. It was worth $400,000 when she passed. If the family sells it for $410,000, the taxable gain is generally measured from $400,000, not from $90,000. That's roughly a $10,000 gain before selling costs instead of $320,000.
You'll want proof of that date-of-death value. An appraisal is the strongest. A detailed market analysis from a local agent is a good start. Either way, save it with the estate paperwork and give a copy to whoever prepares the taxes.
Step 5: Keep the property taxes paid, and expect the exemptions to change
Keep paying the bills. Unpaid property taxes can lead to the taxes being sold, and that is a bigger headache than probate.
Exemptions are tied to people, not houses. In Cook County, the Homeowner Exemption is meant for someone who lives in the home. When the owner passes away and no one is living there, it's supposed to come off, generally by the following year. Senior exemptions and the Senior Freeze belong to the senior who qualified for them.
Don't keep claiming them by accident. Exemptions that should have come off can be billed back later. If an heir moves in and makes it their main home, they may be able to apply in their own name.
Plan for a higher bill. If you're deciding whether to keep the house, budget for taxes without Mom's exemptions. My post on how Cook County assessments work explains why bills can move even when nothing about the house changed.
A quick word on estate tax (most families won't owe it)
For 2026, the federal estate tax only applies above $15 million per person. Illinois has its own estate tax, and its threshold is much lower: $4 million per person. It hasn't been raised in more than a decade, and unlike the federal rule, a spouse can't use the unused portion.
Illinois also has what's known as a "cliff." Once an estate goes over the line, the tax isn't just on the amount above $4 million. Most families inheriting a typical Chicagoland home won't come close. But if the house plus retirement accounts, life insurance and other assets add up to around $4 million, talk to an estate attorney early.
Step 6: Now decide: keep, rent or sell
There's no single right answer. Here's an honest look at each.
Option | Why families choose it | What to watch out for |
Keep it and live there | Sentimental value. May keep a low mortgage rate. You may qualify for your own exemptions. | Repairs on an older home, higher taxes once the prior exemptions drop off, and buying out siblings if there are several heirs. |
Rent it out | Monthly income. Keeps the house in the family. | Landlord rules (especially in Chicago and Cook County), insurance changes, repairs, and the work of sharing income and decisions among heirs. |
Sell it | A clean split for multiple heirs. Stops the monthly carrying costs. Takes advantage of the step-up in basis. | Getting a fair price, cleaning out decades of belongings, and agreeing as a family on price and timing. |
If you sell: a few Illinois details worth knowing
The disclosure form. Illinois generally requires sellers to fill out a property disclosure report. But the law exempts a sale by an executor or administrator "in the course of the administration of a decedent's estate." That makes sense, since an executor who never lived there may not know about the leaky basement. If the house has already passed to you and you're selling it yourself, ask your attorney whether the exemption still applies.
"As is" doesn't mean "anything goes." Federal lead-paint disclosure still applies to homes built before 1978, and some suburbs require a village inspection before a sale.
The market is still working in sellers' favor. In the latest full month of Illinois REALTORS data (July 2026), the median Chicago home sold for $425,000, up 13.3% from a year earlier, and the nine-county metro median hit $401,000, up 6.8%. Higher rates have trimmed buyers' budgets this fall, which I covered in my post on Chicago's recent median price dip, so pricing it right from day one matters.
Don't rush into the first cash offer. "We buy houses" offers are fast, and sometimes that's worth it. But compare the number to what the house could bring on the open market before you sign.
Your inherited-house checklist
☐ Call the insurance company and ask about vacancy rules
☐ Keep the heat and utilities on, and change the locks
☐ Find the will, trust, deed or any recorded transfer-on-death instrument
☐ Talk to an estate attorney about whether probate is needed
☐ Call the mortgage servicer and ask to be confirmed as a successor in interest
☐ If it's a reverse mortgage, respond to the lender's notice right away
☐ Get a date-of-death value and save it for your tax preparer
☐ Keep property taxes paid and check which exemptions are on the bill
☐ Get the family on the same page before choosing keep, rent or sell
How I help families with inherited homes
When a family calls me about an inherited house, here's what I do:
A free home value report you can share with your estate attorney and tax preparer.
Work with your attorney's timeline so the listing fits the probate process, not the other way around.
Full-service marketing: professional photography, a 3D Matterport tour and complete online marketing, so the house gets real exposure even if nobody in the family lives nearby.
A low commission, which means more of the sale goes to the family instead of to fees. On an estate that's being split between siblings, that difference adds up fast.
A Zero Commission Clause: if the family (or a neighbor, or a cousin) finds the buyer on their own, you pay me no commission.
Cancel anytime. No long lock-in while the family is still figuring things out.
Whether the house is in the city or anywhere in the suburbs, I serve all of Chicagoland. And if you're not ready to sell, that's fine too. Sometimes the most helpful thing is just a clear number and a plan.
Call or text me at 312.882.9797 or reach out through jasonrosenbergrealestate.com.
Jason Rosenberg
The Rosenberg Group @ Infiniti PropertiesRanked in the Top 5% of the Chicago Association of REALTORS®Over $100 Million in Sales
This article is general information, not legal, tax or financial advice. Estate, probate and tax rules depend on your specific facts. Please talk with a licensed Illinois attorney and a tax professional about your situation.
Sources
Lundquist v. Allstate, Illinois Appellate Court: Illinois Standard Fire Policy 60-day vacancy rule
Property Insurance Coverage Law Blog: vacancy clauses and vacancy permits
Probate in Cook County: independent administration, 6-month claims period, typical timeline
CFPB: Can my heirs keep or sell my home after I die? (reverse mortgages)
NBC 5 Chicago: Cook County Homeowner Exemption removal after an owner's death
Faegre Drinker: 2026 federal ($15M) and Illinois ($4M, not portable) estate tax exemptions
Illinois REALTORS: disclosure exemptions for estate fiduciaries
Freddie Mac 30-year rate, 7.40% as of Oct. 8, 2026 (via Trading Economics)
Comments