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Judith Said:

Does a co-signer for a mortgage have to pay if the borrow dies or becomes disabled?

We Answered:

The bottom line is that if the mortgage doesn't get paid one way or another, the bank will take the house. If you died or got hurt and couldn't work and couldn't afford it, your parents would have to sell the house and use the money to pay the loan off.

If you get mortgage payment protection, you're basically buying a separate life insurance policy that covers you for the amount of your mortgage. This is a very bad idea. The price of this insurance is WAY higher for the amount of coverage you get. Just get regular term life insurance for a 20-30 year term. For lower monthly premiums you can get coverage that is at least double. This way your parents (or other beneficiary) could use the life insurance money to pay off the mortgage so they can keep the house, plus they would have money left over. You should also have long term disability insurance to provide an income if you get hurt for a long period of time.

I highly suggest you read the book called "The total Money Makeover" by Dave Ramsey. He explains a lot of these concepts better than I can. Also, I suggest you don't buy a house if you can't get it without a cosigner, you will regret it later.