How much is title insurance coverage on a reverse mortgage?

The correct answer is that title insurance coverage on a reverse mortgage is typically 150% of the original loan amount. This higher percentage is designed to account for potential increases in the loan balance over time due to accumulating interest and fees associated with reverse mortgages. Unlike traditional mortgages, where the loan balance decreases as payments are made, reverse mortgages allow homeowners to borrow against their equity, which can lead to a growing balance.

The 150% coverage ensures that in the event of a claim or loss, there is sufficient insurance to cover not only the original amount borrowed but also the added interest and fees that may accrue, providing additional financial security for both the lender and the borrower.

Understanding the structure of reverse mortgages and how they differ from conventional loans is crucial for mortgage professionals, as it affects how they advise clients regarding potential risks and benefits.