Reverse Mortgage CounselingAn Introduction to Reverse Mortgage Counseling
Before any senior homeowner is allowed to take out a reverse mortgage, he or she must attend mandatory reverse mortgage counseling. This may seem like an extra step or a hassle, but it isn’t. It’s a necessary part of the loan application process and serves a valuable purpose. Reverse mortgage counseling is required by the U.S. Department of Housing and Urban Development (HUD), which oversees all legitimate reverse mortgages processed in the nation. The HUD’s primary reason for requiring counseling is to ensure that all seniors who pursue this loan type understand the unique characteristics of the program. Because reverse mortgages are unlike other mortgages, confusion can sometimes result if the loan points are not explained correctly. Counseling is also a form of regulation. There are many scammers in the mortgage marketplace who may try to lure seniors into mortgage situations that are not beneficial. By requiring federally regulated counseling, the HUD is able to make sure that no reverse mortgages are provided with harmful terms or unfavorable conditions. In short, seniors who are interested in taking advantage of all that a reverse mortgage has to offer must work with a qualified HUD counselor before applying for the loan. Find a Qualified Reverse Mortgage CounselorA qualified counselor is an individual or company that the HUD has deemed qualified to administer reverse mortgage information to inquiring borrowers. The HUD provides an interactive form that will allow you to locate each and every qualified reverse mortgage counselor in your area. Simply choose one to work with and contact him or her to arrange a counseling session. The HUD provides information and advice on how to ensure that the counselor you choose is qualified and can meet your needs. The Counseling SessionYour counselor will explain the details of the reverse mortgage program and discuss the effects that the reverse mortgage will have on your estate. If you have any questions about the process, feel free to ask at any time during the session. The counselor’s goal is to help you understand the loan as fully as possible. He or she will explore multiple different financial scenarios with you and make you aware of other financial options you may not have considered. A reverse mortgage should not be your first choice of action unless you have evaluated your situation and determined that it will meet your needs better than any other potential income supplement. Your counselor will help you evaluate both the advantages and the disadvantages of the loan program. If you have questions, consider checking out our reverse mortgage FAQ. Many of your questions are likely answered on this sheet. Reverse Mortgage Counseling on Your BehalfYou may not have to attend the counseling session yourself. It’s possible to have someone attend the counseling session on your behalf. This is a good option if you are busy or facing medical difficulties. The individual who attends the counseling session in your place must be either your legal guardian, your legal conversant, or an attorney representing your interests. You cannot send anyone in your place who does not fall into one of these categories. Reverse Mortgage ApplicationOnce you have completed the counseling, you are ready to apply for a reverse mortgage from your lender. Make sure you take the time to identify the lender who can offer you the best rates on the loan, as every lender charges slightly different closing fees. Once the application is complete and successfully underwritten, you’ll be provided with the funds from your reverse mortgage. |
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