okCustomertime is getting late and my husband wants an answer and your answer seems well informed.
is there any way to probate the estate but not be responsible for the house?
A: You could offer the lender a deed in lieu of foreclosure. The lender must also give a release of further liability for any deficiency balance on the mortgage, otherwise, the lender would still have a claim against the estate. If the lender agrees, then the property will be removed from the estate, and the estate will have no further responsibility. However, if the lender inspects the property and determines that it is worth less than the loan value -- and also realizes that the estate is solvent, then it will demand payment or it will sue for foreclosure and then claim against the estate for the deficiency.
The least pleasant option is foreclosure, because Florida foreclosures are expensive. The lender will lump all those costs into the claim against the estate, and it could add $25,000 to the loan payoff.
Which is why I believe that (assuming you use the proceeds from the life insurance) the most cost effective move is to repair the property, and either sell it or rent it, while bringing the mortgage current. The only reason to not do this is that the costs, plus all of the other debts, exceed the value of the life insurance. That would be the only reason why everyone would disclaim their interests in the estate and just walk away.
Hope this helps.