Although you should do your study and ask a lot of questions to try to get the most excellent bargain when buying a home, car or another big-ticket item, the amount of effort you put into your task is totally up to you. Your due diligence is optional. That’s not so when you’re considering taking out a reverse mortgage to help you retire better.
What is Reverse Mortgage Counseling?
You will undergo necessary reverse mortgage counseling to ensure that you know what a reverse mortgage loans California is and what your obligations are when you have one. In fact, before you can formally apply for a Home Equity Conversion Mortgage (HECM) or incur any fees, you must first undergo an in-person or over-the-phone counseling session (whichever is more convenient for you) conducted by an independent third-party counselor approved by the U.S. Department of Housing and Urban Development (HUD) (HUD).
Reverse mortgage counselors have many obligations. To start, they will explain what a reverse mortgage is and how it works, thoroughly discussing the loan’s fees, benefits, drawbacks, and other financial aspects. They also will assist you in comparing a reverse mortgage with other alternative home equity solutions, such as the selling of your property. In addition, they will check what your lender has informed you to ensure the information you have received is accurate and truthful.
Key Takeaways
- If you or someone you know is thinking about getting a reverse mortgage, you must first get advice from a government-approved service.
- Find out what reverse mortgage counseling entails and how much it will cost.
A reverse mortgage allows homeowners aged 62+ to convert a portion of their home equity into cash while they continue to live at home—provided certain loan obligations are met. If you or an older adult you know is considering a reverse mortgage, you must receive counseling from a government-approved agency.
What do reverse mortgage counselors do?
Reverse mortgage counselors are professionals approved by the U.S. Department of Housing & Urban Development (HUD) who can:
- Evaluate the pros and cons of whether a reverse mortgage is right for your situation
- Screen for public and private benefits that can help you pay for needs like home energy, meals, and medications
- Connect you to other services that can help you balance your budget and stay independent longer
Reverse mortgage counseling can be completed over the phone or in person. Reverse mortgage counselors will explain how reverse mortgages work, including
- payment options,
- costs,
- tax implications,
- benefits and
- drawbacks.
After completing the mortgage counseling session, you will receive a certificate that lenders require as part of the loan application. The goal is for you to understand your options to make an informed decision on whether a reverse mortgage is right for you. Counselors may also use a Financial Interview Tool questionnaire to ensure a robust discussion of needs and considerations.
What is the difference between reverse mortgage counseling and lending?
Counseling is a non-biased educational resource designed to assist seniors and their families in making informed decisions about reverse mortgages. Reverse mortgage lenders do not compensate reverse mortgage counselors. Reverse mortgage lenders are not allowed to give money or make direct referrals to non-profit housing counseling organizations.
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