The reverse mortgage blog called Let Your Home Pay You points out something really important about the federally-funded HECM reverse mortgage loan: it is a non-recourse loan. What this means is that people who get this type of reverse mortgage loan are not personally held responsible for repayment of the loan. The home itself is what is used to pay off the loan but the individuals living there aren't otherwise responsible for paying back the loan.
This is an important thing to think about when considering a reverse mortgage loan. Most people do get HECM reverse mortgage loans but some people opt instead to get private reverse mortgage loans. These private reverse mortgages may not be non-recourse loans which could mean that the borrower or the borrower's heirs would end up personally liable for repayment of the loan, something you definitely don't want to happen with the way that home values are changing!
Question of the Day: What is the value of getting a non-recourse reverse mortgage loan?
