Paying off mortgage

[Sig]

Sounds great...but....

Lets say you share a home with your spouse. They can go after the home and throw her/him out on the street because you had an unpaid debt involving the home ? This is why I mention some types of insurance policies on the home will pay in case of debt by the owner with love ones still living in the home.

Also, I remember reading somewhere that a woman with 80k in student loan debts had died and the student loan agency went after her husband for the unpaid debt.

If this is true or close to the truth...doesn't make sense to accumulate more debt in their golden years if they're still married. Thus, marital status and age seems to have an impact about if the debt accumulation is ok or not ok.

Try a google search on "is a spouse responsible for student loans after death". Just to save you the trouble, here is a quote from https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/death
"What happens to my loans if I die?
If you die, then your federal student loans will be discharged after the required proof of death is submitted."
Hint: This whole google thing allows you to verify things in less time than it takes to type "I remember reading somewhere...."

 

[wrbtrader]

Try a google search on "is a spouse responsible for student loans after death". Just to save you the trouble, here is a quote from https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/death
"What happens to my loans if I die?
If you die, then your federal student loans will be discharged after the required proof of death is submitted."
Hint: This whole google thing allows you to verify things in less time than it takes to type "I remember reading somewhere...."

What about the IRS and home debt as mentioned ? (student loan issue was really something minor part of the question)

I believe this was a discussion before about the topic with lots of links for both sides...they can go after the surviving spouse and they can not. I believe the ET member had a spouse that died and he then asked the question because the IRS begin coming after him for her debts (he had only been married for 2 years and knew very little of her finances prior to marriage).

Student loan debts was something I had "added" with the question when I said "Also" after the question was asked.

 

[Sig]

What about the IRS and home debt as mentioned ? (student loan issue was really something minor part of the question)

I believe this was a discussion before about the topic with lots of links for both sides...they can go after the surviving spouse and they can not. I believe the ET member had a spouse that died and he then asked the question because the IRS begin coming after him for her debts (he had only been married for 2 years and knew very little of her finances prior to marriage).

Student loan debts was something I had "added" with the question when I said "Also" after the question was asked.

Obviously if you haven't paid off your mortgage when your spouse dies you still are responsible for the payments until you've paid it off if you want to keep living there. Obviously if your spouse isn't able to provide for themselves you're going to need to buy some serious life insurance, debt or no. They've still gotta eat and whatnot.

 

[jj90]

The IRS and mortgage debt have what linkage....???

Student loans are a different beast, play nicer with the govt. The banks are a different story. Lots of room for negotiation.

 

[wrbtrader]

The IRS and mortgage debt have what linkage....???

Student loans are a different beast, play nicer with the govt. The banks are a different story. Lots of room for negotiation.

An ET member (not someone from this thread) started a discussion in another thread that basically stated he's a new home owner and stated he's also recently married. He didn't know about his spouse debts and basically wondering if he's liable for her debts even if she dies...later he states she does in fact dies.

Then someone in this thread (stevegee58) states the following...

Well you could borrow the money, live off it, then die of old age.
Wouldn't care much at that point.

That started me to think that may not be a good plan if one is married. The spouse would also be married to the debt due to marriage even though the spouse didn't sign anything. A prior discussion on the topic...some posted links to say the spouse is not liable for any debts obtain when they were married versus debts obtained prior to marriage. Later, other posted links (court cases) that stated just the opposite.

Obviously if you haven't paid off your mortgage when your spouse dies you still are responsible for the payments until you've paid it off if you want to keep living there. Obviously if your spouse isn't able to provide for themselves you're going to need to buy some serious life insurance, debt or no. They've still gotta eat and whatnot.

What was meant that the owner has the mortgage and then later gets married. Then the owner dies. I didn't imply the owner of the home/mortgage has the a home debt and then his/her spouse dies.

I do know in some countries (like mine), there's home owners insurance to pay the home debt if/when the owner dies and has love ones (e.g. spouse) still residing in the home. In comparison, I can't remember such an insurance in the states although my home in the states is paid off.

Regardless, I made that suggestion about the insurance angle without knowing the country of residence stevegee58. Thus, maybe in his country the spouse is not liable for the debts of the other spouse...whereas in other countries the spouse is liable for any debts accumulated during the marriage (not before the marriage).

Simply, it may not apply where he lives but could be worth his time if he looks into home insurance that protects the spouse or adult love ones still residing in the home just in case the home owner dies.

As for myself, I'm single with kids and my home is paid off as stated earlier in this thread and recommended to someone that is in the position to pay off their home to do such instead of refinancing (accumulating more debt).

P.S. I hate debt and don't believe a spouse is liable for one's debts just because they got married. I've actually met people that check each other's credit reports prior to marriage. Thus, it seems like debt is an issue that people don't want to marry into.

 

[stevegee58]

Then someone in this thread (stevegee58) states the following...

Well you could borrow the money, live off it, then die of old age.
Wouldn't care much at that point.

For the record that was just a morbid joke.

 

[wrbtrader]

For the record that was just a morbid joke.

Hahaha...thanks for the clarification.

 

[CET]

I'd get the mortgage making sure to have a LTV ratio that allows you to avoid paying PMI, which will pay off the mortgage if you die. I think they changed the rules these days that if you get PMI initially you cannot drop it after getting the LTV below 80%. Instead get some term life insurance on you to cover the mortgage if you die and lower the coverage as you pay down the mortgage.

As far as dividends I'd focus on companies that have a history of increasing their dividend payout. AAII has a dividend investing newsletter you may want to check out. It's cheap. Also, some companies with great dividends are very pricey as people piled into them looking for yield in the low interest rate environment. Those cold be painful as interest rates climb.

 

[sle]

Eventually all debts must be paid back or go bankrupt. How is this a simplistic world view?

First of all, bancruptcy is not as bad as many people think (not that I've been but I have a friend that had to declare PB, worked out OK for him). Also, you can structure your assets in such way that you owe a lot of money but on paper own nothing - if you default, there are no assets to collect.

I am not saying go wild and over-leverage, we've all seen how that ends. The point is that we have very few opportunities in life to obtain any leverage at a reasonable cost. If the asset has positive expectation over the interest rate, it's silly to forego that opportunity. That is especially true for mortgages since there is no MtM true-up and in the states where mortgages are non-recourse it's a no brainer.

 

[algofy]

First of all, bancruptcy is not as bad as many people think (not that I've been but I have a friend that had to declare PB, worked out OK for him). Also, you can structure your assets in such way that you owe a lot of money but on paper own nothing - if you default, there are no assets to collect.

I am not saying go wild and over-leverage, we've all seen how that ends. The point is that we have very few opportunities in life to obtain any leverage at a reasonable cost. If the asset has positive expectation over the interest rate, it's silly to forego that opportunity. That is especially true for mortgages since there is no MtM true-up and in the states where mortgages are non-recourse it's a no brainer.

IMO this is awful advice, might as well max out 12 month 0% credit card offers too.