Top 6 Reverse Mortgage Counseling Questions
6 questions you need to know about reverse mortgage counseling
One of the requirements that must be completed prior to obtaining a Home Equity Conversion Mortgage (HECM) or better known as a “reverse mortgage” is to have the borrowers attend a reverse mortgage counseling session done by a HUD approved counselor. But what happens at a counseling session and why is it important to do before you complete the loan process? We will share with you some information on what to expect at a reverse counseling session. These counseling sessions are largely there to help protect the lenders and the borrowers, and to provide unbiased information about reverse mortgages to the borrowers.
Why Is the HECM counseling session required?
Getting a reverse mortgages can be a complicated and confusing process, it is required for borrowers to undergo counseling done by a federal government approved third party counselor. The HUD approved third party counselor will provide unbiased information, as well as explain the reverse mortgage process to the borrower(s), including information about costs, borrower responsibilities and more. A third party counselor will also ensure that you are well aware of alternative options that you may have, other than reverse mortgages. The counseling session is mainly to protect the borrower(s) before they go through with their reverse mortgages to make sure that they have a clear understanding of the process.
Where do I get reverse mortgage counseling?
The counseling session can be done either over the phone or at an in-person session.
How much does the reverse mortgage counseling cost?
The average cost is $125 but can vary and this cannot be paid by the lender. It is possible to apply for a “hardship approval” to reduce the fee if you are experiencing financial hardship.
When does the reverse mortgage counseling session occur?
The HECM counseling typically begins just before the application for the reverse mortgage has been completed. Anyone interested in applying for a reverse mortgage loan must attend at least one counseling session with HUD approved counselor prior to obtaining the reverse mortgage loan. The borrower(s) must choose their own counselor and set their own appointment. After the counseling session, you will be given a certificate of completion for the counseling session, which must be provided to the lender so that you are able to proceed with the reverse mortgage loan.
Visit HUD’s HECM Counseling Directory to find a counselor in your area.
What to expect at a HECM counseling session?
At a reverse mortgage counseling session, expect up to an hour-long session with your counselor, which can be done in person or over the phone. The counselor will go through the reverse mortgage process with you, and will explain what a reverse mortgage is, as well as answer any questions you may have. They will also explain all the rules, eligibility and the expectations of the borrower(s) to maintain the loan, such as paying property taxes and maintaining the home.
It is required by law, for counselors to go over other options other than a reverse mortgage. Their main objective is to make sure that you are well-informed before you make the decision about going forward on your reverse mortgage. They are not there to move you toward a certain direction, but to provide you with details regarding reverse mortgages.
At the end of your counseling session, your counselor will go over with you about what you have discussed to make sure that you have a clear understanding of what a reverse mortgage is. Once that is done, they will provide you with a certificate that is required to go forward with your reverse mortgage.
Who needs to attend?
If you are applying for a reverse mortgage loan, you and all borrowers on title must attend the counseling session. A legal representative may also attend on your behalf, which includes conservatorship, guardian or someone with authorized power of attorney to speak on these matters. Some borrowers also bring their adult children or other family members to ease their anxieties about reverse mortgages. It may also be a good idea to bring non-borrowing family members or renters living on the property to attend the counseling sessions, so that they can be informed of what their options are after you pass away and the loan goes into effect.
Reverse mortgage counseling is there to protect the borrowers and ensure that they are going through their options before they get a reverse mortgage. If you are interested in learning more about reverse mortgages and how you can begin the process, you can speak with a Senior Advisor at 1-888-808-8486. Feel free to contact us here at anytime.
About the Author:
I have been working in the reverse mortgage industry for 20-plus years. My goal is to provide consumers the most up-to-date and relevant information about the reverse mortgage industry and how it can affect them.
Thanks for reading!
-Alan F.
Image courtesy of [stockimages] / FreeDigitalPhotos.net
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