I have about 75% equity in my $265K home and, in addition I owe about 25K in unsecured debt. I want to refinance my mortgage and pay off all my debts, except the mortgage. I have about six months to live. Will the terminal prognosis prevent me from the getting a new loan?
I need to do this so my executor will be able to carry the financial load until he finds a buyer. I don’t want to sell now as I’m not up to a move.
I’m not looking for specific legal advice, but I would like to hear the experiences of mortgage loan officers, or others who may have had a recent experience w/ this kind of situation. Thanks in advance for any help you can offer.
BTW, some may suggest I don’t mention it unless asked. I hadn’t intended to offer the info., but I won’t lie if asked. It’s pretty obvious when you meet me that my health is poor.
In my experience, I’ve never seen any medical questions or issues involved in any financing or refinancing of a primary residence.
I’m not familiar with what they may ask for a “reverse” mortgage, where you are permitted to draw down on established equity as payments over the term of the loan, but that doesn’t seem to be what you’re asking about. Rather you’re looking for a simple “cash out” refinancing, which shouldn’t involve any medical questions at all. (It might be different if you were asking for a commercial loan for a business.)
The main issue will be the quality of your credit history, with many banks refusing to lend to borrowers with less than very good credit. Another issue will be the loan to value ratio. Many banks will not go above an 80% loan to value ratio, particularly in a refinance, or if they do it will be in a significantly higher rate program.
Good luck.
Mortality isn’t usually an issue with a mortgage loan, since the obligation to repay becomes a liability of the estate. Thus, as long as there will be enough assets to repay the loan (for instance, from selling the house), your health won’t affect the loan process.
I’m sorry to hear of your condition, and wish you the best of luck. Medical probabilities are only probabilities.
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Have you thought of a living trust for the house? You can transfer ownership without having to go through probate.
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Crap. For a brief moment, I thought this was one of those hypothetical situations (“suppose you know the world is ending in xxx months”) then I realized this is not MPSIMS. Sorry to hear about your health 
Now to the question: We’ve never been asked health-related questions when we’ve financed or refinanced a mortgage. They will look at your overall creditworthiness and income. If your illness makes that look bad (e.g. your income has clearly dropped, or your credit card balances and other debts are increasing), those lower your credit-worthiness. But it’s the financials, not the health (not indirectly).
It may also be worth checking with a lawyer who handles estates - perhaps the lawyer who drew up / revised your will if you’ve done that recently - as to the logistics of settling the estate and whether doing the mortgage as you’ve described is the easiest way to handle it. My only experience with something like that, and it was secondhand, was with my mother’s estate, and she had plenty of cash on hand to cover miscellaneous bills as they came in. I’m guessing this is not your situation if you’re considering refinancing.
Sorry not to have responded earlier.
Thanks to all and a special thanks for the words of compassion. $25K will clean up all my financial obligations, except for the mortgage. I’ll probably take another 15-20K because I anticipate being in a hospice house for my final days. That costs $300 a day. That will leave my brother (the executor) w/ the mortgage payments, which he can handle for a few months anyway. That will give him time to find a buyer w/o being under pressure to sell immediately. The market in this area is still fairly strong, so hopefully he will be able to get a decent price. My credit is good. I checked my credit score and it was 762 about a year ago and I intend to check it again before applying for the refinance. I was just afraid that the terminal diagnosis would be a problem, I’m a bit reassured by the responses I received. Thank you again.
You probably don’t need to clean up all of your financial obligations. When my mother died suddenly a few years ago she had a lot of unpaid bills. I ended up contacting all of the creditors with a copy of the death certificate, they stopped all interest from date of death. Your executor should be given plenty of time to settle everything, I know I was.
Geez- I wish I hadn’t read this.
Don’t check your credit score. You’d only be paying $25 to drop your score a few points, and if it drops below a guideline threshold you could end up with a worse rate.
Tragic footnote to this thread: mortgage means ‘death pledge’.
Best wishes to you and your loved ones, A.R. Cane.
I have no pertinent information to post, except to reiterate that there was never a question of health status in any of my mortgages. I too thought this was a hypothetical.
I am sorry.