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It's even surrealer to me that my mother got a 30 year mortgage. She's 80. While I think she has an outside chance of living till 110 - she has really good ge

It's even surrealer to me that my mother got a 30 year mortgage. She's 80. While I think she has an outside chance of living till 110 - she has really good genetics - I doubt the bank knows this... I'm not exactly sure what the plan is (though she is good for the payments so long as she lives).

gizmo686 4y ago
Most 30 year mortgages are paid off within 10 years; often using the proceeds of selling the house in question. The bank's plan is that they will sell the mortgage before the paint drys; then they don't care what happens. Regardless, the expectation is that your mother will continue making payments until either she or her estate sell the house, at which point the full balance of the loan will be repayed without any early payment penalty.
lordnacho 4y ago
When you die, your estate still owes the money to the bank. The bank is thinking when she passes the estate will sell the house, or she'll end up needing a retirement home and sell. Worst case if she's insolvent they'll take the house, but with a large enough down payment this won't cause a loss for the bank. Nobody thinks an 80yo will live another 30 years btw. Queen Elizabeth is 96 but her chances of writing herself a letter are actually not even half, since annual attrition at that age is something like 20 or 30 percent. Sorry to be a downer, I don't mean to be cynical about your mom, just looking at statistics.
- throwawaymaths 4y ago
  No worries, you don't seem to be appreciably more cynical about my mom than I am. I did say it's only an outside chance she lives to 110. If I had to bet on it, I'd bet against. The bank is taking a risk though, even if they did get recover with the estate, that's got to be a pain in the ass. I wonder at what point the administrative cost of getting that house resold doesn't make sense.
  - lordnacho 4y ago
    I suspect they get a probate lawyer to just dump it off cheaply to a lucky buyer. If the equity in the house is over 20% or so it's unlikely it would sit long on the market, for instance you give a 10% discount and someone will happily get that done fast.

gizmo686 4y ago

Most 30 year mortgages are paid off within 10 years; often using the proceeds of selling the house in question. The bank's plan is that they will sell the mortgage before the paint drys; then they don't care what happens. Regardless, the expectation is that your mother will continue making payments until either she or her estate sell the house, at which point the full balance of the loan will be repayed without any early payment penalty.

lordnacho 4y ago

When you die, your estate still owes the money to the bank. The bank is thinking when she passes the estate will sell the house, or she'll end up needing a retirement home and sell. Worst case if she's insolvent they'll take the house, but with a large enough down payment this won't cause a loss for the bank. Nobody thinks an 80yo will live another 30 years btw. Queen Elizabeth is 96 but her chances of writing herself a letter are actually not even half, since annual attrition at that age is something like 20 or 30 percent. Sorry to be a downer, I don't mean to be cynical about your mom, just looking at statistics.

throwawaymaths 4y ago
No worries, you don't seem to be appreciably more cynical about my mom than I am. I did say it's only an outside chance she lives to 110. If I had to bet on it, I'd bet against. The bank is taking a risk though, even if they did get recover with the estate, that's got to be a pain in the ass. I wonder at what point the administrative cost of getting that house resold doesn't make sense.
- lordnacho 4y ago
  I suspect they get a probate lawyer to just dump it off cheaply to a lucky buyer. If the equity in the house is over 20% or so it's unlikely it would sit long on the market, for instance you give a 10% discount and someone will happily get that done fast.