Life insurance a mortgage lifeline

Q: I co-owned a home with my mother, who passed away about seven years ago. She had put my name on title before she died, but didn't really tell me anything about the mortgage situation except that I needed to pay the bank X number of dollars per month. I didn't realize that the mortgage would adjust. It did adjust, though, and the payment increased -- and around the same time, I lost my job.

A friend connected me with a hard-money lender, who bailed me out of that really bad loan for a year until I was able to refinance it with a regular mortgage lender. He also gave me about $50,000 I used to fix up the place.

After the refi, though, I ended up with a loan that has a three-year prepayment penalty, and I've almost done two years of that. I'm struggling to make the payment, because my employer just went out of business. The lender did give me a three-month trial loan modification, which reduced my payments and is helping me get through this tough time. I am hoping to refinance my loan next year, assuming I have a new job by then, because the interest rate is pretty high.

I'm so weary of feeling stressed about the payment on my home -- especially knowing that this house was once owned free and clear by my mom, but I'm ready to learn from my past mistakes. What did I do wrong?

A: Well, perhaps the overarching error, if you will, is being too hard on yourself. You were originally put in a tough spot at an emotionally trying time, through no real fault of your own. But I do think there are a number of potential mini-cautionary tales in your story that other folks can benefit from, so let's go ahead and go down the list.

First off, at the time your Mom put your name on the property, in anticipation of passing away, you missed a great opportunity to fully educate yourself about the mortgage obligation that would soon become yours. Every homeowner should know the basics of their mortgage at a minimum, including (but certainly not limited to):

• The type of loan (fixed or adjustable)
• The term of the loan (e.g., 15-year, 30-year, 40-year)
• The interest rate
• The loan balance and payment, and
• If adjustable, when the adjustment(s) will occur, and how they will affect the interest rate and payment. ...CONTINUED

All rights reserved. This article may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this article without permission is a violation of federal copyright law.