Mortgage Life Insurance

[DWalt]

I was in the regulatory end of banking for quite awhile, and I have seen many co-signed loans go sour. As others have said previously, you are a fool if you co-sign on a loan for anyone - kids, parents, best friends, even Jesus Christ - anyone. "Thou Shalt Never Co-sign" should be the 11th Commandment.

 

[sigp220.45]

I co-signed for my youngest son's first car. He never missed a payment, and actually paid it off early.

I was happy to. I'm his Dad.

 

[riverrat38]

Maybe it's $3/mo per thousand of loan!

73,
Rick

 

[Pisgah]

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?

I've been licensed for 25 years or so. And as I think the wording of my post indicated, circumtsances play in to which sort of coverage is best, and why. In this case the main issue I was addressing is affordability, and mortgage life insurance is no good deal unless you cannot qualify for regular life coverage. So, two points -- it's expensive, and for most people there are better alternatives when it comes to cost. Exactly which option is one individual's "best" choice would, of course, depend on that person's specific circumstances

 

[AJ]

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?

I would never cosign a loan for anyone except family. Then I would be looking closely how much I trust the family member.

As far as life insurance on the home loan, that could be a life saver. Had a friend and his wife that bought a new house after moving to a different state. He turned down the offered life insurance. Two months later he found out he had cancer and died 6 months later. Now the wife is struggling to make both ends meet.

 

[CAJUNLAWYER]

The reason banks want a guarantor (or co signer) is because tey are afraid the borrower will default. No other reason for it. A seminal case in Lousiiana on suretyship (what we call guarantee) begins with "Surety starts off as a beautiful woman that when crossed can turn into a vindictive shrew" Never forgot that beautiful bit of prose.
Full disclosure: I co-signed on my daughter's apartment lease in New Orleans because she had no credit history. What can I say...I'm her dad.
Regarding the situation I see the red flag is "Friend and his girlfriend" That alone is fraught with complications as opposed to a husband wife situation.
Here is a common scenario: She decides screw it-I'm out of here. She is jusgment proof and he can't afford to pay with just one social security check so if you co sign you're toast. I think that a decreasing term policy is a good idea both for them as well as the bank. One dies and the bank gets paid off and the survivor has total ownership in half a house until the deceased kids force a sale since thee is no surviving spouse right of habitation. This scenario just SCREAMS problems. My will consists of one page. "I leave EVERYTHING to my wife." Surround that with all the requsite legal mumbo jumbo- dust it with Tony's and have it notarized and DONE. Next project.

 

[THE PILGRIM]

Yes I would sign for a Family member.
But probably not for anybody else!
A while back I bought a Property for my youngest.
We did a massive amount of cleanup, haul off and then he decided he didn't want it!
"In the Pines, in the Pines.
Where the Sun never shines.
And I'll shiver the whole night through. "
Leadbelly

 

[SMSgt]

You cosign a load for your kids when they get out of college and are trying to get established, job, housing and otherwise. Other family and friends, not a chance. Good way to turn family and friends into bitter enemies.