Reverse Mortgage Counseling

Reverse Mortgage Counseling

If you are 62 or older and are interested in applying for a reverse mortgage, otherwise known as a Home Equity Conversion Mortgage (HECM), you will first need to complete reverse mortgage counseling. The purpose of reverse mortgage counseling is to ensure that you are informed of the features of this unique kind of loan, how a reverse mortgage can impact you and your loved ones, and any possible alternatives that might be better suited for your needs. 

The Federal Housing Administration (FHA) funds the housing counseling agencies throughout the nation that fulfills this counseling in the hopes that by educating you on all aspects of reverse mortgage loans, you will be able to make a sound decision and avoid unnecessary surprises down the road. 

Think a reverse mortgage may be right for you and your family? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.

What Do HECM Loan Counselors Do?

You might be relieved to learn that HECM counselors won’t try to sell you on any product or lender. That’s not their job. Rather, HECM counselors exist to assist you in understanding your options and how these options can impact your lifestyle. Moreover, FHA requirements mandate that reverse mortgage counselors abide by specific practices, each put in place to ensure that you receive quality counseling and protection against elder abuse and fraud. 

The Benefits of Reverse Mortgage Counseling

  • An overview of all payment options and how they work
  • Explanations of all the pros and cons of having a reverse mortgage
  • In-depth discussions of tax and financial implications of reverse mortgages
  • An overview of all costs that can result from a reverse mortgage

Through reverse mortgage counseling, you will receive a solid education on how reverse mortgages work and how well they fit your individual needs. The HECM counselor will also cover with you possible alternatives to reverse mortgages that might be a better fit. You can also expect to talk about your responsibilities in signing a reverse mortgage and its possible consequences for any heirs you might have. 

In order for this meeting to be as helpful as possible, come ready to discuss your long-term plans for staying in your home, as well as your financial situation. It’s also a good idea to bring along any family members or an executor of your estate, so you can all be on the same page in regards to your choice on a reverse mortgage.

How To Find An HECM Reverse Counselor In Your Area

Understanding how impactful the decision to get a reverse mortgage can be, the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) now require that you receive housing counseling from an unbiased and approved HECM counselor. 

You can find your local HECM counseling agency through one of these ways: 

The meeting can be done face-to-face or over the phone, although HUD recommends a face-to-face meeting to get the most benefit. Upon setting the appointment with you, the agency will send you a helpful information packet to prepare you for the counseling session. Keep in mind that, in order to keep the discussion impartial, your lender cannot set up or participate in this discussion. 

Once the HECM counselor is satisfied that you have a strong understanding of reverse mortgages, they will issue you a certificate of completion. You can then take this certificate to your lender to verify that you have completed the reverse mortgage counseling requirement. 

Under HUD requirements, HECM counselors must:

  • Send you informational material prior to your scheduled counseling session
  • Conduct the counseling session according to established protocols
  • Follow-up with you once the session is completed to answer any additional questions

Reverse Mortgage Counseling Fee

You should know that you may be charged a fee by the agency for the counseling service, approximately $125. Most agencies, however, will also discuss other payment options with you if you cannot afford to pay the fee. For instance, the National Council on Aging will not charge you a reverse mortgage counseling fee if you fall into one or more of the following groups:

  • You are an older adult considering a reverse mortgage in response to financial hardships, such as a bankruptcy or a foreclosure
  • You are an older adult who uses respite care
  • You are an older adult whose monthly income equals 200% or less of the federal poverty level
  • You are an older adult with a higher income who participated in reverse mortgage counseling but decided not to proceed with the reverse mortgage 

Ultimately, the decision of whether or not to get a reverse mortgage is up to you. A reverse mortgage counselor is there only provide you with the information needed to make a sound decision, according to your preferences, situation, and needs. 

Think a reverse mortgage may be right for you and your family? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.