Home Buying in Philadelphia>Question Details

Liz Domar, Other/Just Looking in 19027

We are seniors buying a home with 40% down on 200,000---main concern is--it will be a 30 year mortgage, what

Asked by Liz Domar, 19027 Sun May 24, 2009

happens when we are both dead--as i suppose we will be ?

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Check with a good accountant for the right strategy.

I'm not an accountant, but--in brief--the equity in your home is an asset. If you didn't do anything else (such as putting the house in a trust), The executor of the estate would have a $200,000 home with a $120,000 debt. Most likely, the executor would sell the home for $200,000, pay off the mortgage, and the equity--the $120,000 would remain in your estate. It then would be divided up as you specified in your will. If you didn't specify a division of assets in your will, then state law takes over (you'd have died intestate), specifying which relatives (children, grandchildren, etc.) receive the proceeds.

However, that's a really messy way to do it. You need to consult with someone who specializes in estate planning. Most likely, the recommendation will be that your home (and possibly other assets as well) be placed in a trust. It's then a lot easier and cleaner to convey those assets to whomever you want.

Hope that helps.
0 votes Thank Flag Link Sun May 24, 2009
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Liz,

Your question made me smile. In 1999 I sold a home in South Philadelphia to a 92 year old lady who was one of my favorite clients. We sold her home, which wasn't in the best part of town, so her sale proceeds weren't sufficient to purchase the home that recently became available two doors down from her granddaughter who was her primary caregiver. Being on a fixed income she couldn't afford much per month. However, with the down payment money from her home sale and a 30 YEAR MORTGAGE for the balance she was able to afford her new home. I remember laughing at settlement with my client and her loan officer when she pointed to the final payment date of 2029 on her mortgage papers. She told the loan office not to depend on receiving that final payment. Mortgage companies can not discriminate on age - so her 30 year mortgage was just like my 30 year mortgage. We had her and her granddaughter, who was her sole heir, talk to an estate attorney. They set up a program that was right for their situation. Six years later she passed. We sold the home, paid off her mortgage and the proceeds went to her granddaughter as anticipated. Contacting a good estate attorney BEFORE making the final arrangements on the house purchase is critical. The manner in which her original purchase was set up created a simplistic process for the eventual sale and distribution of proceeds to her heir once she passed.

Good luck and may you many years of enjoyment in your new home.
0 votes Thank Flag Link Wed Sep 2, 2009
You know the saying "you can't take it with you?" the good news is, that includes DEBT - you leave it behind. I suppose you'll leave the house - by will or by state law - to some heirs. You'll have a mortgage balance on it, they will either decide to keep the house or sell it. They can chose to live there or rent it. At worst, they would let it be taken back by the bank. An attorney can tell you if there are repercussions to that, but in most cases, there aren't any repercussions to the heirs.

Most people sell a house they inherit and pay off the mortgage and then divide up and spend or invest the remaining funds.

May I suggest that you look into a reverse mortgage? You can now purchase a home with it, so you would have no mortgage payments, or reduced mortgage payments. Be careful, there are various products out there... contact your area agency on aging for recommendations for lenders.
0 votes Thank Flag Link Sun May 24, 2009
Liz,

You never know what will happen in 30 years.

You should find yourself a great estate attorney who can help your wills. This is not a question for Realtors. I wouldn't take any advice from anyone other than an attorney.

On another note, I hope you are happy about your new home.

Renee Porsia
Associate Broker
RE/MAX ACTION
(215) 669-0589 Direct
(215) 358-1100 Office ask for Renee
http://www.reneeporsia.com
0 votes Thank Flag Link Sun May 24, 2009
Dear Liz,

As you can imagine, this happens a lot.

Your heirs will get your property and can continue to pay the loan or pay it off.

It's that simple!

So, enjoy the house!
Web Reference: http://fredglick.com
0 votes Thank Flag Link Sun May 24, 2009
make sure to buy ortgage insurance, this way your house will pass to oour heirs and it will be paid off, or you can instruct your will or trust to pay it off upon passing.
andra
0 votes Thank Flag Link Sun May 24, 2009
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