Do People Really Use Mortgage Insurance to Pay Off Their Mortgage

[ksigmtsu]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Buy a smaller (or bigger/nicer) place with cash with the 500,000 at a foreclosure auction and walk away from the underwater house.

I mean in a doing the most optimal thing regardless of credit score outcome sort of scenario.

 

[crons79]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

Sounds like a plan. Let me know how that works out for you (and your client).

 

[agent2011]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

MP is not the best fit for all clients. It does work well for people that may have some minor health issues.

 

[lmt125]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

I used to specialize in "Mortgage Protection" which is what its known as. A lot of times people can't afford to cover the complete amount of what they owe...so yes they can buy half of what they owe with a 30 year term, usually thats how long the mortgage is for. Now wether they use that money now to pay off half of the mortgage or just make payments or use it for whatever that is up to the beneficiary.

People can always make wills and other legal documents stating that the death benefit from XYZ policy and company is only to be used to pay the mortgage. Maybe they have another policy just to cover the families livelihood etc.

 

[Larry Tew]

Re: Do People Really Use Mortgage Insurance to Pay Off Their Mort

...People can always make wills and other legal documents stating that the death benefit from XYZ policy and company is only to be used to pay the mortgage. Maybe they have another policy just to cover the families livelihood etc.

If you're talking about having life insurance proceeds paid directly to a beneficiary and also having a will directing them to take the money and pay off the mortgage, it doesn't work that way.

The only way to do what you suggest is to have a testamentary trust as beneficiary of the life insurance with instructions to the trustee to pay the mortgage. Besides, with tax deductions, net cost of mortgage, earnings potential of lump sum death benefit, paying off the mortgage may not be the best option mathematically.