First of all, I'm single. I doubt my parents are on the hook for this in any event.

Second, isn't this just some weird life insurance? If I were to die tomorrow, my family would sell the house and move on. Or the bank would sell it. Or whatever.

I hate commercials that prey on fear. Especially the ones for old people- "Who will find you and take care of you if you fall down the stairs?"

Total BS.

Regular life insurance is better, and if you are single who cares? The only reason for such insurance is to keep your family in the house, and even then regular life insurance is a better deal.

I guess what they really mean is that your "estate" will still have a debt in the form of a mortgage so is liable for the payments. I doubt that even a bank would force your family to continue to make mortgage payments provided the executor takes reasonably timely action to deal with things (assuming someone tells the bank what has happened, of course). I think most banks require that the mortgage be repaid in full if the debtor dies, but some time would be available to liquidate assets. The most likely problem would be if you had taken one of those deals where you can borrow 100% of the value of the house and haven't paid off enough to cover the legal fees etc - your estate would then be in debt to the bank and I'm not sure who (if anyone) would be liable for that if you didn't have sufficient assets to cover the debt. Probably nobody, because you can't be liable for a debt that you didn't agree to. If someone was a guarantor, that would be different, of course.

Insurance companies are scum, though - everyone knows that.

*works for an insurance company*

really?
i have so many non insurance related questions too--
but i feel dirty now.

Mortgage insurance is one thing, private mortgage insurance is another. The lender can make the loan contingent on the buyer maintaining the latter.

Your best bet is to ask a realtor in your community.

Are you talking about a separate, stand-alone mortgage insurance, or the PMI that people are saddled with if they buy a place with less than 20% down?

The former is definitely BS, but the latter is a totally different BS. PMI isn't insurance for you, it's for the bank that's lending you the money -- essentially, because you don't have 20% to put down on the property, you're considered a default risk, so they're forcing you to pay extra in case you can't pay later. We got around it when we bought our condo by doing an 80-15-5 loan -- 5% down, one mortgage for 80 percent and another one for 15%. The smaller loan covered the rest of our 20% in the eyes of the bigger loan, so we didn't have to pay PMI (we did have to pay a higher interest rate on the smaller loan, but still netted out to less than PMI).

What mischief and me3dia said (I used to be a mortgage underwriter).

That's good to know me3dia. I'm house-hunting.

I went through the same split mortgage, me3dia, and am paying PMI on the little one. I was referring to standalone mortgage insurance. It looked like BS when I got it in the mail, but I thought twice because it came from the 2 banks that are financing my mortgage. I should know better, but that somehow made it seem more legit. Thanks, all.

Check that junk mail closely, scarabic -- I've gotten more than one missive from "Citibank" offering a refinance or something, which in the fine print turned out to be from some random financial scamstitution.

Citibank?! Ugh! You might as well deal with Fleet Mortgage, or perhaps your local loan shark.