Mortgage Life Insurance

[wood714]

A friend and his girl friend are trying to buy a house, and he told me his real estate agent told him they could get mortgage life insurance for $3.00 a month.

I thought he was high so I did some googling and found for a non smoker under 50 years old it ran between $37 to $50+ a month, and those companies could be scams.

Both of them smoke, she's 57, and I think he's around 67. He's already had prostate cancer.

Thing is they asked me to co sign on their loan.

I'm 64 and debt free, and no way in the world would I make a commitment like that. I probably wouldn't even do it for one of my kids.

But...is it possible for someone in their age and health group to even get such insurance on a mortgage?

 

[JOliver]

I'm sure it's available but I doubt it's $3.00 a month
Sounds like a "COULD be as low as $3.00 a month if you fill all this paperwork out and let us get all your information and harass the ever loving heck out of you for the remainder of your loan" kind of deal.
Doesn't sound legit and no judgement of your friend but at that age and asking a friend to co-sign they may not be dealing with the highest of reputable companies. Just an opinion and no offense to you. The internet has changed the real estate and insurance world drastically over the years and there are plenty of scammers in this line of work as well.
The old rule of if it's too good to be true, then it probably isn't.

 

[arjay]

No,it isn't possible.

 

[Dave_n]

The old trick used to be "take out a term life policy" for the next "x" years that simply covered you. Then once you were reducing the capital (usually about 7 years on a 30 year mortgage) and then reduce the amount of the term life policy every 5 years or so. Equally if a reputable insurance company (oxymoron anyone?) would write a reasonable policy that covered the whole time at a reasonable rate (your definition of reasonable), then jump at it. The bank's idea of requiring life insurance was usually predicated on a whole life policy for the complete figure ignoring that the amount insured was decreasing. This way the bank/insurance company were looking at a nice sum from ill-informed buyers. Dave_n

 

[444 Magnum]

As a former commercial lender, I can tell you that it's ALWAYS cheaper to buy an independent life insurance policy than to purchase it through the lender. The insurance agent gets a commission as does the lender. At his age and a smoker, however, life insurance of any substantial amount is going to be high.
You are wise to not co-sign a mortgage. If a man needs a co-signer at his age, he either is trying to buy too much, has a history of slow pay, or cannot document his income. I don't recommend co-signing for anyone other than perhaps a child just getting started. As a lender, I discouraged co-signing and I made it clear with the borrowers that, if the loan was late, I would call the co-signer first and expect immediate payment. A lot of would-be co-signers backed out after that conversation.

Edit for clarification: A co-signer's name is actually on the loan documents. A personal guarantor is liable for repayment of the loan but his guarantee is a separate document attached to and referenced but not part of the loan document (his/her name isn't on the loan but may be listed under collateral). This is a general statement as loan and security documents differ by state. Both types of signers are liable. Both are generally a bad idea.

 

[glenwolde]

Probably more like $3.00 per month per $1,000 of face value. I'd have to see the paperwork before cosigning that.

When asked to cosign you have to ask yourself "Can I afford to pay off this loan, assume the asset, and be happy about it?" If that's a "no" then don't do it.

 

[max]

Don't ever cosign unless you can afford to loose the money. There is a reason they need a cosigner and it is not good!

 

[smoothshooter]

I am 65 years old, and not wealthy, but okay financially.
At this point in my life I would be ashamed for anyone to know I needed someone to cosign for me on anything.

 

[charlie sherrill]

During my LEO career my side job was selling life insurance. I wrote many decreasing term policies to cover mortgages. They are very affordable for younger folks if you buy them from the right companies. Check around on the rates as they vary quite a bit with different companies. Basically the amount of the coverage decreases as the amount of the mortgage decreases. The premium remains the same. I would not recommend using this type policy for primary life insurance, only to cover a large debt.

I have co-signed on one loan in my life and that was my son's first car. He paid it off and I haven't co-signed anything since, and won't. There's too much risk on co-signing anything. There's a reason they need a co-signer and it isn't good. Besides that, whatever amount you co-sign will decrease the amount you are able to borrow for yourself should the need arise.

 

[444 Magnum]

When asked to cosign you have to ask yourself "Can I afford to pay off this loan, assume the asset, and be happy about it?"

There is no "assuming the asset". The co-signer is an obligor on the note only, no ownership is implied. That would have to be addressed separately outside of the mortgage.

 

[Muss Muggins]

I co-signed for my son's first car. My name is on the title. The bank didn't even ask how to title it . . .

There is no "assuming the asset". The co-signer is an obligor on the note only, no ownership is implied. That would have to be addressed separately outside of the mortgage.

 

[Pisgah]

The advantage to mortgage life insurance -- it requires no health questions. If you need it, and you can't get life insurance any other way, you can get it on your loan. It's usually not cheap, but it's usually quoted to seem so. Fact is, it's usually a single premium that is calculated for the entire term of the loan, which is then added to the financed amount so that you end up paying cost plus however-many years of interest. And keep in mind -- the premium is X-amount per month for every month of the loan -- even though the amount it will pay (the balance of the loan at your death) gets smaller every month.

If you need life insurance, and if you're insurable, a term life policy is generally the better choice.

 

[glenwolde]

There is no "assuming the asset". The co-signer is an obligor on the note only, no ownership is implied. That would have to be addressed separately outside of the mortgage.

You are correct. I was not.

 

[wood714]

Thanks for the replies.

I'd never co sign on a house, even for my kids. Way too big of a commitment.

Maybe I'm a get off my lawn old man, but I would never take out a loan on my current house, unless one of my kids needed a life or death operation that their insurance wouldn't cover.

 

[robrossk]

Have a family member that co-signed on a home loan for a sibling. I thought she was nuts but oh well. Not my money, not my problem.

 

[len917]

A friend and his girl friend are trying to buy a house, and he told me his real estate agent told him they could get mortgage life insurance for $3.00 a month.

I thought he was high so I did some googling and found for a non smoker under 50 years old it ran between $37 to $50+ a month, and those companies could be scams.

Both of them smoke, she's 57, and I think he's around 67. He's already had prostate cancer.

Thing is they asked me to co sign on their loan.

I'm 64 and debt free, and no way in the world would I make a commitment like that. I probably wouldn't even do it for one of my kids.

But...is it possible for someone in their age and health group to even get such insurance on a mortgage?

If they asked you to co-sign on a loan, they shouldn't be owning a house. That's why there are rentals.
Just my opinion

 

[Golphin]

A friend and his girl friend are trying to buy a house, and he told me his real estate agent told him they could get mortgage life insurance for $3.00 a month.

I thought he was high so I did some googling and found for a non smoker under 50 years old it ran between $37 to $50+ a month, and those companies could be scams.

Both of them smoke, she's 57, and I think he's around 67. He's already had prostate cancer.

Thing is they asked me to co sign on their loan.

I'm 64 and debt free, and no way in the world would I make a commitment like that. I probably wouldn't even do it for one of my kids.

But...is it possible for someone in their age and health group to even get such insurance on a mortgage?

You didnt say how much the mortgage is so I don't know how much coverage we are talking about. But the answer is no they can't get anything for 3 bucks a month. If they don't have health issues at the age they are and smokers even 50k would cost them well over a hundred a month I would guess. I am a insurance agent but don't have a way to figure it right now but it will not be cheap at the age they are at even in good health.

 

[biku324]

Co-sign for no one. Ever.

 

[Golphin]

The advantage to mortgage life insurance -- it requires no health questions. If you need it, and you can't get life insurance any other way, you can get it on your loan. It's usually not cheap, but it's usually quoted to seem so. Fact is, it's usually a single premium that is calculated for the entire term of the loan, which is then added to the financed amount so that you end up paying cost plus however-many years of interest. And keep in mind -- the premium is X-amount per month for every month of the loan -- even though the amount it will pay (the balance of the loan at your death) gets smaller every month.

If you need life insurance, and if you're insurable, a term life policy is generally the better choice.

How long have you been in the insurance business? I assume you are a licensed agent since you are giving insurance advice. Why is term insurance a better choice and how do you come to that determination without knowing the persons financial situation and the reason they need the insurance?

 

[steelslaver]

My late wife against my advice, co signed for her daughter to get a car. 6 months later the daughter dropped the car off at dealers and quit paying on loan. Not good for our relationship.