Home Buying in Toms River>Question Details

An Antagonist, Home Buyer in Toms River, NJ

Does life insurance factor in with a mortgage loan?

Asked by An Antagonist, Toms River, NJ Tue Jan 22, 2013

If I'm married and carry personal life insurance that far exceeds a planned mortgage loan, can this factor in - in any way - as a guarantee that the entire loan will be paid in full by my wife? Can it be written in to guarantee full payment? Thank you.

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Jim Simms’ answer
No, the only way it comes into play for mortgage underwriting is if it has a cash value and the loan you apply for requires cash reserves. The cash value of the life insurance can be used for reserves.
Of course your wife can use the settlement to pay off the house if something happens to you but it does not factor in the decision making process. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference: http://jamessimms.com/
1 vote Thank Flag Link Tue Jan 22, 2013
The answer is no. The only things the mortgage company considers are current income, Bank accounts, Investment portfolios and total net worth. Life insurance only comes into play on your demise, for your wife to pay down the mortgage if she so desires.

Anthony Policastro, Agent, Manchester, NJ
0 votes Thank Flag Link Sat Mar 16, 2013
Jim's answer is correct for New Jersey too.
0 votes Thank Flag Link Tue Jan 22, 2013
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