Illustration: Chris GashIf your house goes up in flames, does your obligation to pay your mortgage go with it? Borrowers are bound by the promissory note they sign at the closing of a home purchase or refinance to make monthly mortgage payments. A mortgage also requires the borrower to give prompt notice to both the lender and the insurance carrier in the event of a loss. But jumbo borrowers, or those with substantial savings or low mortgage balances, may opt to pay off the mortgage directly. “If the client does not want to rebuild or just wants to satisfy the mortgage, they can pay the mortgage in full, and we would release the insurance proceeds back to them,” Mr. Zarro says.

Source: Wall Street Journal January 11, 2017 15:51 UTC