There are too many variables for this question to be answered very accurately. First, contact the manager of your parents' estate to see how the home is being handled. It may or may not be as simple as taking ownership of the property.
Contact your tax professional to discuss any tax implications
Then, contact the lender – have proof of your parents passing, and of your identity and rightful inheritance of the home on hand. Some lenders will allow you to assume the loan the property … some will not. This is sometimes a matter of how the loan documents were originally drafted, so be aware that while the lender may WANT to allow you to assume the current loan, they may or may not be able to do so.
If assuming their loan is not possible, practical, or working out – contact a local loan officer to discuss your options. There may be less than perfect loan options available to you, even with imperfect financial history, and they are all worth considering carefully.
While this isnt a solution … most lenders will not object to you simply paying the mortgage for the time being. The legal ownership, etc will need to be resolved eventually, but provided that the home need not be sold to cover any other debts, and that the estate has confirmed your right to inherit it, the lender will not likely bother you if they are receiving their payment on time every month. Doing this (by check, like clockwork!) will also create a strong case for your eventual assumption of the loan if possible – as you will have already proven that you can pay it as it stands.
I run into many people that have simply assumed payment on a loved one’s loan informally … and while this isnt necessarily the formal solution …they have obtained title, and paid it for many years without the lender’s objection, until the loan is paid in full.
It is not necessary for you to be given permission by a lender to “assume” a loan where you come into possession of a property through inheritance. The Federal law known as the Preemption of Due-on-sale Prohibitions prohibit the lender from enforcing the due-on-sale clause in this circumstance. See 12 USC § 1701j–3 where it states:
“With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units,…a lender may not exercise its option pursuant to a due-on-sale clause upon—…a transfer to a relative resulting from the death of a borrower;….”
So as long as you continue to make the payments on the loan and comply with all the other terms of the security agreement, the lender cannot force you to refinance or pay off the loan.