Looking for the definition of a non-recourse loan? Look no further.
What is a non-recourse loan?
A non-recourse mortgage loan is a loan which is secured by a pledge of collateral, the home, but for which the borrower is not personally liable.
A reverse mortgage is a non-recourse loan.
The Federal government insures that the borrower can never owe more on the loan than what the house is worth when the loan is repaid, and all remaining equity belongs to you or your heirs. Non-recourse loan lenders making HECM loans are covered by FHA insurance.
Non-recourse loan rates: Most reverse mortgage loans are non-recourse loans by design. It is a comfort to many homeowners to know that no matter what the interest rates do in the future (rates are tied to the market or fixed for the life of the loan), you or your heirs can never own more money than the property is worth.