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Home loan/legal question #4649770
01/29/18 07:23 AM
01/29/18 07:23 AM
Joined: Oct 2005
Posts: 1,689
South Dakota
otis24 Offline OP
otis24  Offline OP

Joined: Oct 2005
Posts: 1,689
South Dakota
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?


1991 Chevrolet K1500 (4.3, 4x4, 86k miles)

2016 Dodge Grand Caravan
(3.6 V6) 46500 miles
Re: Home loan/legal question [Re: otis24] #4649780
01/29/18 07:36 AM
01/29/18 07:36 AM
Joined: Mar 2013
Posts: 5,300
The Midwest
skyactiv Offline
skyactiv  Offline

Joined: Mar 2013
Posts: 5,300
The Midwest
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?


Wife: 15' Audi A4 quattro 6 speed manual
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Re: Home loan/legal question [Re: otis24] #4649783
01/29/18 07:38 AM
01/29/18 07:38 AM
Joined: Jun 2002
Posts: 2,778
Southeastern USA
FowVay Offline
FowVay  Offline

Joined: Jun 2002
Posts: 2,778
Southeastern USA
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.

Re: Home loan/legal question [Re: otis24] #4649809
01/29/18 08:11 AM
01/29/18 08:11 AM
Joined: Jun 2003
Posts: 10,692
Illinois
javacontour Offline
javacontour  Offline

Joined: Jun 2003
Posts: 10,692
Illinois
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?


I'm not a lawyer, nor do I play one on TV. I imagine that if you were to pass away before the mortgage is paid off, it would become a liability for the estate. If there isn't enough money in the estate to pay off the mortgage, the bank would either expect her to refinance the home in her name, or begin foreclosure and take the home.

They are unlikely to allow her to keep making payments indefinitely after you pass away.

Why not put her on the mortgage? If stay at home moms can be on a mortgage, so can she. Can you just say no income for her and have her on it?


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Re: Home loan/legal question [Re: otis24] #4649823
01/29/18 08:39 AM
01/29/18 08:39 AM
Joined: Apr 2008
Posts: 85
Leesport, PA
MedicRxDoc Offline
MedicRxDoc  Offline

Joined: Apr 2008
Posts: 85
Leesport, PA
Your estate will be responsible for the loan and the property may be one of the estates assets.

Please seek local legal advice that can review the legal documents. Wording of the deed can make a huge difference of ownership.

Re: Home loan/legal question [Re: otis24] #4649845
01/29/18 09:08 AM
01/29/18 09:08 AM
Joined: Dec 2007
Posts: 568
Madison, Wisconsin
TWG1572 Offline
TWG1572  Offline

Joined: Dec 2007
Posts: 568
Madison, Wisconsin
^^^ 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.

Re: Home loan/legal question [Re: otis24] #4649848
01/29/18 09:11 AM
01/29/18 09:11 AM
Joined: Mar 2013
Posts: 5,300
The Midwest
skyactiv Offline
skyactiv  Offline

Joined: Mar 2013
Posts: 5,300
The Midwest
I'm curious, how much underwater are you? See if you can fix that problem.


Wife: 15' Audi A4 quattro 6 speed manual
Me: 13' VW GTI 3 door 6 speed manual

Re: Home loan/legal question [Re: skyactiv] #4649864
01/29/18 09:22 AM
01/29/18 09:22 AM
Joined: Sep 2004
Posts: 22,366
Central Florida
Mr Nice Offline
Mr Nice  Offline

Joined: Sep 2004
Posts: 22,366
Central Florida
Originally Posted By: skyactiv
I'm curious, how much underwater are you? See if you can fix that problem.


That's not the info the OP was asking.

His wife's name needs to be on all important things including their house documents.

Re: Home loan/legal question [Re: otis24] #4649865
01/29/18 09:23 AM
01/29/18 09:23 AM
Joined: Oct 2009
Posts: 4,021
Wet side WA
JohnnyJohnson Offline
JohnnyJohnson  Offline

Joined: Oct 2009
Posts: 4,021
Wet side WA
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.


2004 Corolla 129987
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Re: Home loan/legal question [Re: otis24] #4649887
01/29/18 09:42 AM
01/29/18 09:42 AM
Joined: Oct 2004
Posts: 8,742
Cincinnati, OH, USA
bullwinkle Offline
bullwinkle  Offline

Joined: Oct 2004
Posts: 8,742
Cincinnati, OH, USA
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.


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Re: Home loan/legal question [Re: otis24] #4650380
01/29/18 05:23 PM
01/29/18 05:23 PM
Joined: Apr 2005
Posts: 590
Under the hood
Carmudgeon Offline
Carmudgeon  Offline

Joined: Apr 2005
Posts: 590
Under the hood
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.

Re: Home loan/legal question [Re: otis24] #4650775
01/30/18 06:30 AM
01/30/18 06:30 AM
Joined: Oct 2005
Posts: 1,689
South Dakota
otis24 Offline OP
otis24  Offline OP

Joined: Oct 2005
Posts: 1,689
South Dakota
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.


1991 Chevrolet K1500 (4.3, 4x4, 86k miles)

2016 Dodge Grand Caravan
(3.6 V6) 46500 miles
Re: Home loan/legal question [Re: otis24] #4650786
01/30/18 06:59 AM
01/30/18 06:59 AM
Joined: Jul 2012
Posts: 2,798
South Carolina
alarmguy Offline
alarmguy  Offline

Joined: Jul 2012
Posts: 2,798
South Carolina
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?


Smart move, (im not an attorney) but there is nothing wrong with only one spouse on a mortgage.
Yes, she can walk away.
There is no obligation on her regarding the loan.

Anyone with a mortgage does not "own" a home. The bank owns it until you finish paying them off.
If you die and she can still pay the monthly payment as it was, no problem and she ends up with a home when she is done paying it or as you say, she can just walk away, owes nothing.

Here is a bit more.
"If your name is on the deed or if you are left the house in your husbands will, you may be eligible to assume the mortgage under the Garn-St. Germain Depository Institutions Act of 1982. This law limits a lenders ability to foreclose on an up-to-date mortgage when the owner of the property changes. It doesnt mean that the lender wont try to add on a fee when it shouldnt. If you are a surviving joint tenant, or if the title was transferred by inheritance to a related owner-occupant, the Garn-St. Germain law bars the lender from enforcing the due-on-sale clause. Your lawyer will help you sort out all these options. This possibility would, of course, only succeed for you if you can afford to continue to make the mortgage loan payments."

Bottom line is although it sounds simple, laws vary state to state, but she cant be force to pay a loan she did not take out, bank can take the house back.
AS far as comments regarding the "estate" I mean, anyone can sue anyone for money in the USA, whether or not a bank has a desire to would matter if the rewards far exceed the cost of trying too, which in most all cases it does not.
Trying to cheat the system, could put a burden on the surviving spouse and why you would need to talk to an attorney, vs us in BITOG. *L*

Last edited by alarmguy; 01/30/18 07:08 AM.

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Re: Home loan/legal question [Re: otis24] #4650790
01/30/18 07:19 AM
01/30/18 07:19 AM
Joined: Oct 2005
Posts: 1,689
South Dakota
otis24 Offline OP
otis24  Offline OP

Joined: Oct 2005
Posts: 1,689
South Dakota
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....

Last edited by otis24; 01/30/18 07:20 AM.

1991 Chevrolet K1500 (4.3, 4x4, 86k miles)

2016 Dodge Grand Caravan
(3.6 V6) 46500 miles
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