Take Over Payments

• If either party on a loan dies, the other party becomes responsible for taking over the loan payments. This is the promise made to the mortgage company when the loan is signed. “Cosigners are just as responsible for paying off a loan as the primary borrower,” according to MSN Money's Liz Pulliam Weston. Until all matters surrounding the deceased's estate are settled, payments need to be kept current. If the primary borrower is the surviving party, the mortgage company may require another cosigner for new loans once they are notified of the cosigner's death.
  
  

Missed Payments

• If the surviving party on a mortgage misses payments on a loan after the other party's death, it still counts against them. Both signers are responsible for the loan, even if one person on the mortgage dies. Missed payments can result in the lender suing to collect money, foreclosure and a hit to your credit score, according to Bankrate.com. If you are left with a mortgage you don't want and can't pay, contact the lender to discuss options such as selling the home or turning it over to the bank.
  
  

Settlement of Estate

• When the deceased's estate is settled, all assets and debts, including loans, are taken into account. Depending on the way a mortgage is structured and applicable state laws where the home is, assets from the estate may pay the balance of the mortgage, according to MSN Money. An attorney should be consulted when dealing with estate and monetary distributions. Payments must be kept current while an estate is being settled. The second option, if the mortgage and home is not deemed part of the estate, is for the surviving party to completely take over the loan and payments. In this case, the surviving account holder should make sure to file the appropriate paperwork to ensure that the property is deeded in his name.
  
  

Protection for Cosigners

• Before cosigning on a loan, take steps to help protect your finances. Ask the lender to notify you in writing if the other party on the loan misses a payment so you will know immediately if things start going poorly. Ask the lender if you can have limited responsibility for the loan -- limit your obligation to the value of the loan only, not late fees or other finance charges. Remove yourself from the loan after a certain time. Three to five years after the origination of the mortgage, most lenders will remove a cosigner from a loan as requested if the other party has made every payment on time, according to Bankrate.com.