Life after a mortgage? Maybe, but you can't take it with you.

By
Mortgage and Lending with Tailwinds Mortgage NMLS 1105200 NMLS 1185934

       This post from Amanda and Jared Christiansen seems to have struck a certain interest in many people here on ActiveRain.  Upon briefly scrolling through its comments, one could easily determine that discrimination would be considered fair judgment for lenders who were to deny seniors a loan due to their age alone.

 

But what happens to the loan?

 

       There is one fate every human being must face; and as mentioned in Genesis 6:3, will happen no later than reaching 120 years of age.

       The typical promissory note on a home includes a set of spouses and a 30-year term.  Suppose that couple is in their 90's, according to Genesis 6:3, if they make their necessary payments for the typical term length, their note will not have been fulfilled in their lifetime.  What happens to the home?  In this case, the bank takes possession of it.

       Working chronologically, when the primary borrower passes on, the co-borrower would inherently take over payments; when the co-borrower perishes as well, there would be no responsible party left to carry out the note.  Just as if a living borrower were to stop making payments, the bank which services the loan would be forced to take control; likely to lead in a foreclosure situation.

       However, in the case of FHA and VA mortgages, assumptions can be made by descendants or stakeholders of the original borrower's estate.  The HUD Reform Act of 1989 stipulates that the applicants wishing to assume the loan may do so, but are subject to the same requirements which would be applied on an original mortgage.  Naturally, those who succeed the original borrowers are under no obligation make such an assumption and would be unable to in any situation other than that of an FHA or VA loan.

       If the loan is paid off in the borrowers' lifetime, the title will belong to the homeowners, free and clear of any possibility of bank interception, and would then be exposed to usual inheritance rules or parameters set by the estate.  Death can be a tender topic, understanding exactly what will happen to the subject mortgage upon the borrower's deceasing might help ease at least some financial uncertainty.  I appreciate any questions or comments regarding this matter, please feel free to share.

 

Genesis 6:3 reads: "And the Lord said, My spirit shall not always strive with man, for that he also is flesh: yet his days shall be an hundred and twenty years."

 

(Image courtesy Craftyjoe / FreeDigitalPhotos.net)

Posted by

Tailwinds Mortgage

 

Rachel Khoury

Colorado Mortgage Broker

rachel@tailwindsmortgage.com

(720) 270-4324

NMLS 1105200 | NMLS 1185934

TailwindsMortgage.com 

Comments (0)