What Happens When Your House Burns Down and You Still Have a Mortgage?

When a house fire strikes, the emotional and financial impact can be devastating. But what happens when you still have a mortgage to pay off? Here's what you need to know about your financial obligations and how to navigate this challenging situation.

Your Mortgage Doesn't Disappear

Even if your house is destroyed by a fire, your mortgage doesn't go away. You are still responsible for making payments on the mortgage, as it is a loan secured by real estate, not the building itself. In some cases, your insurance company may pay off the mortgage if the fire is covered by your policy. However, if you have a "force-placed" policy, the mortgage company may require you to continue making payments until the house is rebuilt or you sell the property. If you can't make the payments, you risk going into foreclosure.

Insurance May Cover Your Mortgage

If your homeowner's insurance policy covers the fire, the insurance company may pay off the outstanding mortgage balance. However, this depends on the specific terms of your policy. Make sure to talk to your insurance representative about the insurance payout and any additional living expenses required for temporary housing.

Property Taxes Still Apply

While the value of the house itself may be reduced to zero, the land is still taxable. You must continue to pay property taxes on the land. Contact your local tax assessor's office to discuss any available relief programs or exemptions.

Financial Moves to Make After a House Fire

1. File an Insurance Claim: File an insurance claim to start the recovery process and to help pay for temporary housing. Your insurance company should put four months' worth of loss-of-use payments or comparable rent into your account.
2. Apply for Disaster Assistance: Apply for disaster assistance from the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA). Even if you're insured, you should still apply for FEMA aid.
3. Document Losses: Take photos and videos of everything to document your losses. Keep all receipts while displaced, as these may be reimbursed through insurance.
4. Contact Your Mortgage Servicer: Call your mortgage servicer and ask about plans to help survivors. You may be able to work out a deferred payment schedule.
5. Protect the Property from Further Damage: Take steps to protect the property from further damage, such as boarding up doors or windows and applying a tarp if the roof is damaged. Keep receipts for any repair items.



Navigating the financial aftermath of a house fire can be challenging, but understanding your obligations and taking proactive steps can help you rebuild your life and your home. Don't hesitate to seek professional advice or consult with a financial advisor to discuss your specific situation and explore potential solutions.