This is not a situation you want to find yourself in, but what happens if the person you’re buying a home with passes away? It could be a spouse, partner or family member. What options do you have? Will you lose the house? Will you be stuck paying for the entire mortgage when you can’t afford it?
When you’re applying for a mortgage, the best thing to do is check “Yes” on the insurance policy. It’s expensive, but worth it if it’s a concern. Do not put yourself in a situation where if you or your partner passes away and you are left without the means to fulfill the contractual agreement you made with the home owner to purchase the home. You are obligated to close on the deal regardless of your unfortunate circumstance and you should always protect yourself to ensure that you don’t run into this huge financial nightmare.
If one of the parties passes away, your mortgage insurance will pay your whole mortgage and you will be moving into a house that’s paid cash. It’s not something you want or expect to happen, but at least insurance has you covered because, as a buyer, you’re obligated to fulfill the purchase and sale agreement when you take possession of the property.
The best thing to do is to check “Yes” on the insurance policy, and when you’ve moved in, and you’re both healthy, apply for a term life insurance policy for the mortgage amount; it will be a lot cheaper then running into problems and risks. Once that’s done, you can cancel your insurance policy with your lender.
Remember: Buy a home without the risk. That initial mortgage insurance will act as a bridge as you get set up in your new home if the unthinkable happens until you are able to set yourself and your spouse up of regular term life insurance for the mortgage amount.
Are you thinking about buying a home and need more helpful tips? Watch this video! Do you need financing in place before buying your home? (Toronto, Hamilton, Niagara, GTA, Ontario)