What is a non-recourse reverse mortgage? Are all reverse mortgages of the non-recourse type? How do I know if I have a non-recourse reverse mortgage?
A non-recourse reverse mortgage is a type of reverse mortgage that guarantees there will be no obligation by you, or your estate, should the sale of your home fail to pay the entire reverse mortgage debt. These types of rever4se mortgages are insured mortgages. Federally insured reverse mortgages are also known as FHA mortgages or HECM mortgages. In the event of your death or vacating of the residence your home will be sold to pay the debt. However, if you have a non- recourse reverse mortgage any balance remaining will be paid by the insurance policy
Are all reverse mortgages of the non-recourse type?
No. The only types of reverse mortgages that are considered non-recourse are the ones that are insured. TO have insurance on your reverse mortgage you must get the loan through a FHA approved lender and purchase reverse mortgage insurance. Currently, the only way to get reverse mortgage insurance is to purchase it through FHA/HUD. Private lenders do not offer this type of program at this time. This program, again, can only be obtained through FHA and the insurance policy must be purchased.
How do I know if I have a non-recourse reverse mortgage?
When you complete all the closing documents on your reverse mortgage you will need t sign papers for mortgage insurance. This is how you can tell if you have a non-recourse reverse mortgage loan. If you do not pay for an insurance policy on your reverse mortgage, you do not have an insured loan. To have an insured loan, or non-recourse reverse mortgage, you must purchase an insurance policy from FHA on the mortgage and pay yearly premiums.
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