Real Estate News

Homeowners have to honor their mortgage no matter what

Published: 16 Jan 2017

Mortgages can continue as a responsibility even when the owners don't realize it. Because of this, new buyers should remember title insurance as an addition to the purchase itself as a way to cover possible fees later on. The Wall Street Journal recently reported on this same idea albeit using the example of home insurance during a fire.

What's applicable in both cases is the way homeowners may need more insurance than the default to cover all losses. The source spoke to SunTrust Mortgage Executive Vice President of Mortgage Operations Mike Zarro, who talked about the aftereffects of a total destruction of the home, which could leave the owner with the full cost to contend with.

Zarro described his company's approach to the situation, noting that the owner has to pay back, although they have options for doing so.

"If the client does not want to rebuild or just wants to satisfy the mortgage, they can pay the mortgage in full, and we would release the insurance proceeds back to them," he said. "Or, some lenders may allow you to refinance by doing a home-equity loan on the land or what residual structure remains."

A news source suggested that mortgage sales are currently high. According to the Mortgage Bankers Association, mortgage applications for new homes in December 2016 were 2 percent higher than they were the previous year.

While it represented the smallest increase size compared to those of the previous months, this movement still continued a six-month trend, closing out the year on a high note and potentially leaving the market ready for future development. From the buyer's perspective, this can be a good incentive to work harder toward securing their ideal home, fighting against the competition.