My wife and I are refinancing our home. The loan is in my name alone due to the fact that she is self-employed and it is a hassle proving income,etc.. However, we are both on the title. If something should happen to me and she decides that the home does not have enough equity to make it worth messing with, can she simply walk away from the home? What are her obligations regarding the loan should something happen to me?
Home loan/legal question
- Thread starter otis24
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The real questions are:
Are you admitting you don't have life insurance? And do you/her have any money saved up at all to live on a few months until the check comes?
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What do you mean by simply walking away from the home? If you're implying that you'll just walk away from a mortgage loan and leave the bank holding the bag then that doesn't sound very responsible.
As for your question - it sounds like something you should get in writing before you assume another mortgage on the property.
Originally Posted By: otis24
My wife and I are refinancing our home. The loan is in my name alone due to the fact that she is self-employed and it is a hassle proving income,etc.. However, we are both on the title. If something should happen to me and she decides that the home does not have enough equity to make it worth messing with, can she simply walk away from the home? What are her obligations regarding the loan should something happen to me?
Your estate will be responsible for the loan and the property may be one of the estate’s assets.
Please seek local legal advice that can review the legal documents. Wording of the deed can make a huge difference of ownership.
^^^ this. The house and loan enter your estate. If she does not want to, or is unable to, repay/refinance the mortgage then the house will be sold to cover the balance. This is all general - and as mentioned, state laws will be the final word.
Assuming she's the executor of your estate, she's going to have her hands full with this route. If she's worried about whether its worth the messing around for the limited equity in your house, it seems like this route would be even more painful.
I'm curious, how much underwater are you? See if you can fix that problem.
Originally Posted By: skyactiv
I'm curious, how much underwater are you? See if you can fix that problem.
My first thought is you're trying to suck more equity out of your home. Bad logic learn to live within your means if that's the case!
There are still currently about 12 million loans in the US that are under water. I'm not anxious to bail the Banks out again with TARP II.
This pretty much just happened with my mother-in-law's house-she had refinanced for $75K, at the age of 60, with a 30 year loan (!). She passed on and still had 2 mortgages on the house, the original & the refi, and not enough equity in the house to make it worth keeping. The estate turned it over to the bank, basically took title in lieu of payment, the bank is going to sell it, but they won't get back what she owed on it (father=in-law died 10 years earlier). If your wife's name is not on the refi NOR the title, if something happens to you it's going to be the executor of your will or probate that deals with it.
The real question is how the two of you hold title to the property.
That determines the rights and responsibilities of succession in case something happens to either one of you.
Since new title and deed documents are going to be recorded with the new loan, this is your chance to make changes, according to your desired outcome.
Are you going through a broker or directly with a lender? A good loan agent will be able to guide you through the process. Irregular income isn't a big deal. Lenders are aware that not everyone gets a steady paycheck. Documentation may take a bit of work, but that applies to everyone now, after the free-for-all and mortgage meltdown.
If you have questions, consult a professional. Just keep in mind that while the various entities do work around a common goal, each party still retains expertise only in their particular field. A real estate agent may be able to give credible tax advice, but ultimately is not a tax attorney. And vice versa, etc.
Yes, I do have insurance. Plenty. She may not want to stay where we currently live should something happen to me. She is on the title, just not the loan. She would be able to pay off the loan with insurance money....if she chose to do that. We are in the process of a refi to consolidate some debt, but the loan will be a 15 year loan as opposed to our current 30 year loan. Based on the appraisal value, we will still have equity in the home after a refi. In additon, in a short five years, our balance will be much lower and our equity much higher.
Originally Posted By: otis24
My wife and I are refinancing our home. The loan is in my name alone due to the fact that she is self-employed and it is a hassle proving income,etc.. However, we are both on the title. If something should happen to me and she decides that the home does not have enough equity to make it worth messing with, can she simply walk away from the home? What are her obligations regarding the loan should something happen to me?
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I am working directly with the lender, who will be the loser should I pass and they are unable to sell the house for what is owed. It is at their suggestion that she is not on the loan. Presumably to make it easier for them to close and not have to wait getting financial statements on her business, etc....
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