A house that has been condemned is no longer considered inhabitable. You can’t live there anymore, because it is considered unsafe for any number of reasons.

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And the city or municipal authorities might order you to vacant it as required by law. If you have a mortgage attached to a condemned property, then that’s a matter of worry.

After all, the costs will incur if the house is to be demolished. Other than that, your mortgage will surely be affected somehow.

So what happens to your mortgage when your house is condemned?

Certainly, your mortgage alongside the property is going to be affected. Because the mortgage is still attached to it, you’d need to continue with your monthly repayments.

It is because the mortgage is attached to the land on which the house structure is built. So even if it gets demolished or it becomes inhabitable, you’d still be paying the lender.

And if you fail to do so, you might face foreclosure against the condemned property. This would result in your credit score getting hit negatively.

But the good news is that most of your costs can be covered if you had applied for an insurance policy. Usually, lenders or banks would go for this route when they have assessed the property.

Some rules and policies regarding the condemned house are written clearly in the mortgage documentation. That includes the mortgage clause related to the condemned property.

So before you fill out the mortgage paperwork, you should read all the terms. Or, have your attorney assist you in these matters, which have legal clauses attached to them.

Bottom Line

The most common thing that can happen to your mortgage if your house is condemned is foreclosure. Or, the banks or lender would contact the property owner or the city municipal. And you might have to pay the remaining or full mortgage.