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Whenever I hear about a European mortgage application process, there are always health records involved. They want to know that the borrower is likely to outlive the mortgage (or most of it, I guess).

When I got my mortgage in the United States, no one took notice of my health, life insurance plans, or anything like that.

I figure there has to be some underlying regulatory difference, but what is it? Is it that in America there is some legal bar to doing that, or is it that in Europe you can't insure against the borrower dying, or something else?

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In the United States, the Fair Housing Act and the Americans with Disabilities Act (ADA) prohibit discrimination based on health problems.

It doesn't matter how old you are or what health problems you have. Realistically, if you die, most likely the mortgage lender will be paid in full from the sale of the home or other assets or they get the house. Historically, on average the home will be worth more than the amount that is owed (on an original first mortgage).

Also, for keshlam's great comment: Lenders will normally only lend 80% of the value of the home without charging PMI (Private Mortgage Insurance). The PMI insurance policy protects the lender in case of default. PMI fees vary depending on the size of the down payment and the loan, from around 0.3% to 1.15% of the original loan amount per year.

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    ... which is also why the standard mortgage is for not more than 80% of the house's value. That gives them some buffer to make sure they can recover their investment. Mortgages above that line are much harder to obtain and carry higher costs/rates to make up for the higher risk. (Alas, borrowing less doesn't necessarily lower your rate, though it may let you avoid having to pay for insurance which also helps protect the lender.)
    – keshlam
    Jul 31, 2014 at 3:33

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