If I take out a 20 year mortgage, do I only need to pay for 7 years, this is the statute of limitations for debt.
?: No you pay for the entire 20 years. First, the 7 year statute of limitations is not on the debt itself, but on the length of time the lender can report the debt to a credit bureau after you have defaulted (stopped making payments). Second, there is a shorter statute of limitations (usually 3 to 6 years) in which the lender can use the court system to order repayment through a judgment. The lender for a mortgage would take action much quicker than this. The dent itself lives on forever (there is no statute of limitations on the debt).
Finally, and here is where your plan falls down – the mortgage is secured by the house itself (collateral). AT any time (one year 7 years 20 years), if you do not pay the mortgage, the lender can take possession of the house – this collateral does not expire.
In all cases, the statute of limitations starts when you stop making payments, not when the loan or debt starts repayment – be assured that the lender will take action well before any of these SOLs starts.
A 20-year mortgage means it must ALL be paid within 20-years. However, if you can double or add extra towards the principle monthly – then you can pay it off at any time.
While there is a statute of limitations on debts, it is not applicable in this situation. When you sign a mortgage, you signed an obligation to make the payment for the duration of the contract.
Once you start missing payments, the mortgage holder will begin foreclosure proceedings.
The statute of limitations refers to unsecured debts. A mortgage is a secured debt, secured on the property. If you stop paying the mortgage company just sells the house to recover their money.
you can stop paying after 1 month if you like
all that happens is you lose the house then have to pay for the loss the loan company makes when it sells it
(and as already said- the clock starts ticking when you stop making payments
you stop paying after 7 years they have 6 years from then to do something.
You are thinking unsecured debt…
You have secured Debt….
they sell your guarantee (the house) to recover the money.
now if there was a housing price crash.
and there was not enough money at the end of 20 years OR anytime you walked away from paying…. THAT left over amount owning -would be a debt that would have a 7 year life on it. (7 years if they forgot / did not keep reminding you .. .if they keep reminding you, it stays)
Do I ? well you do if you want bad credit for years and the house taken away from you and sold to repay your debt and then you struggling to find anywhere else to live and most landlords wouldn't want to rent a place to someone who could just suddenly decide to stop paying
If not you pay off your debt in full
if you have 20 yr mortgage or any length, you pay the entire time unless you double up your payments and have more paid toward the principle to reduce the time you are obligated to pay
No – you are entering into a 20 year contract.