Posted on: 11th Jul, 2011 12:45 pm
My deceased daughter had purchased a home prior to her death. She was paying mortgage insurance but the bank claims it does not pay off the mortgage? She believed it would--I am really confused about this. The bank has reduced the payment--but they simply put what would be paid on the end of the loan. Why does mortgage insurance not pay the home off??
Mortgage insurance is not what you think it is, it seems. It appears that your daughter bought this particular home with less than 20% down payment. That caused the lender to seek mortgage insurance (insurance against default) from a Mortgage Insurance Company. What is insured is a percentage of the balance of the mortgage.
Only Mortgage Life Insurance would pay the mortgage in full upon her death. Is it a life insurance that you're thinking about? If so, it would appear that there was none (it's a ripoff anyway).
It seems to me that the lender is correct in doing what it's doing, and the best bet to pay off the loan may well be to sell the home. You didn't say anything about occupancy at this time, which would, of course, impact any decision you make about the home.
I hope I've clarified things for you. Double check with the lender again to see if that's the insurance that they're referring to as I suspect.
Only Mortgage Life Insurance would pay the mortgage in full upon her death. Is it a life insurance that you're thinking about? If so, it would appear that there was none (it's a ripoff anyway).
It seems to me that the lender is correct in doing what it's doing, and the best bet to pay off the loan may well be to sell the home. You didn't say anything about occupancy at this time, which would, of course, impact any decision you make about the home.
I hope I've clarified things for you. Double check with the lender again to see if that's the insurance that they're referring to as I suspect.
I have to agree with gmakerley advise. Since this is all about your daughter's deal I can see that you don't really have enough knowledge about it so it would be better if you let an expert evaluate it for you.
I agreed. First you have to find out is the "Mortgage Insurance" you talked about is "PMI" of the mortgage payment or "Mortgage Life Insurance" that was paid extra.
"PMI" which is called mortgage insurances protect lenders/banks not the borrowers.
Val
[External link deactivated as per forum rules. Thanks.]
"PMI" which is called mortgage insurances protect lenders/banks not the borrowers.
Val
[External link deactivated as per forum rules. Thanks.]
