It’s the number one complaint among existing borrowers and prospective ones at that, that reverse mortgages are difficult to understand. While some know more than the others, the very structure of reverse mortgages requires an in-depth discussion. This is why prospective borrowers of Home Equity Conversion Mortgages (HECMs) must undergo and complete a reverse mortgage counseling.Who’s interested in getting a reverse mortgage? Click here.
Reverse Mortgage Counseling: Why Go Through It
With all the rumors and misconceptions surrounding reverse mortgages, completing a reverse mortgage counseling is a requirement and imperative toward making an informed decision.
The HUD has a list of approved reverse mortgage counselors, professionals who will carry out the counseling wherever you are in the country.
You can look up a counselor, which can be a local housing agency or an intermediary such as the National Council on Aging (NCOA). You can also ask your lender for a list of these HUD-approved counselors; lenders are not allowed to assign you to a certain counselor.
Reverse mortgage counselors per the NCOA can help you by:
- Explaining how the product works, its pros and cons, payment options, and so on.
- Based on the pros and cons, evaluating whether getting a mortgage is right for your situation.
- Screening benefits from public and private sectors that can help you with your meals, medications, and other needs.
- Connecting you with services that help you stay independent as long as possible.
What Can You Expect From It
A run-through of the reverse mortgage counseling process
In carrying out the reverse mortgage counseling, a counselor follows through a checklist of topics and things to be discussed with the prospective borrower or client.
The counselor initially takes note of the prospective borrower’s (i) personal information like name, address, and date of birth; (ii) estimated home value, its location and type; (iii) existing mortgage debt; and (iv) any unpaid federal debt.
He/she is required to disclose the fees of the counseling session at the onset of the session. The fee for the service is usually paid upfront but can be delayed at closing if the client is determined to be facing financial hardship or that his/her income falling 200% below federal poverty thresholds.
During the counseling process itself, the counselor has to define his role, the topics to be covered in the session, and the client’s choice for either face-to-face or telephone session.
The counseling session itself can take up to 90 minutes or longer. It will take off from the reasons behind the client’s interest in reverse mortgages as well as his/her personal and financial goals.
The costs and features of a reverse mortgage will be laid out by the counselor and more importantly, the obligations that it entails from the borrower.
If the reverse mortgage won’t work out with your current situation, the counseling can provide you with financial alternatives.Have more questions or concerns, talk to a lender today.