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my father passed away with mortgage insurance, does that pay off the mortgage balance

my father passed away with mortgage insurance, does that pay off the mortgage balance. I live in utah
By ddrose27192 from UT Sep 19th 2014
Reply

Unfortunately no. Mortgage insurance protects the lender in case of default. If payments stop being made, the bank takes the house back and the mortgage insurance company pays a lump sum to the bank so that they can unload the house more easily. Is there anyone on the mortgage/title that is living? It may be advantageous to refinance.

Sep 19th 2014

Unfortunately, it does not. Mortgage insurance covers the lender in case of default by the borrower. It covers a percentage of the loan amount, minimizing the lender's losses on the foreclosure. So in essence is "loan insurance" that the borrower pays for rather than the insured (the lender).

Sep 19th 2014

If you mean the typical mortgage insurance that is included in loan payments with less than 20% equity, then no it does not pay off the mortgage. That is to cover he lender in case of default only. If he had a personal policy, like a life insurance that was designated specifically to pay the mortgage balance, then it would cover it. But, my guess is that he didn't have that as it's not very common. Hopefully he had the title jointly held with your mother or someone else to be able to make claim to the property without going through probate. If you have any questions, please drop me an email or a call. I am in Salt Lake.

Sep 19th 2014

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