Reverse Mortgage Counseling Can Help You Make the Best Decision for You
Reverse mortgage HUD counseling is not only required but is an important part of securing a reverse mortgage. Here is your guide for how to find an approved counselor and what to expect from the counseling.
Reverse mortgage counseling is designed to:
- Educate you about how reverse mortgages work and to help you decide whether or not the product is a good fit for you
- Help you explore other financial options that might also meet your needs
- Provide guidance and resources to help you make the best decision
- Provide support throughout the reverse mortgage application process
However, it is important to note that the counseling sessions are designed to help you ask good questions and find good information. No counselor should ever tell you what you should or should not do.
The goal of reverse mortgage counseling is to help you make the best decision for you.
You will first have a preliminary phone call or meeting with your counselor. They will gather some information from you and give you information about their counseling fees and provide you with literature about reverse mortgages.
You will then have a counseling session where you discuss:
- The information you provided them when you first talked
- Your interest in a reverse mortgage
- Your personal and financial goals
- Your needs and circumstances
- Your eligibility for the loan
- Reverse mortgage features, costs, obligations and implications after closing
- Information on financial alternatives, reverse mortgage refinances, HECMs for purchase and annuities
Next, you will review the information and the counselor will assess your understanding. If they feel like you have a good understanding of the information, then they will issue you a HUD Certificate of HECM Counseling.
A HUD Certificate of HECM Counseling is required for the reverse mortgage application.
The counselor will be available to answer any additional questions you have after the session (for example, any questions that arise during the loan application process).
Reverse mortgage counseling can happen at any time. However, your reverse mortgage loan application cannot be processed until your lender has received an executed copy of your HUD Certificate of HECM Counseling. The certificate is issued by your counselor but also needs to be signed by all borrowers and the non-borrowing spouse, if applicable.
If you are planning on applying for a reverse mortgage, be aware that HUD Certificate of HECM Counseling are only valid for a period of 6 months. Once this time has passed you will be required to complete HUD counseling again and receive a new certificate.
Many counseling sessions can be done over the phone, and some are held face to face. Some agencies can perform your counseling session via computer on Skype, a webinar, Webex, Gotomeeting or other online networking system.
Some recent state specific requirements are:
- Counseling is required PRIOR to Application in Tennessee and Vermont
- Face to Face Counseling in California, North Carolina, Vermont and Minnesota
You and anyone else eligible to be included on the loan attend the counseling sessions. If you have a non-borrowing spouse they will also be required to attend. Other involved parties like family members living with you or anyone you would like helping you with this decision may also attend.
The counselor may also request that a family member, your lender, a financial advisor or any other interested party attend the counseling if they believe that you would benefit from their attendance.
To secure a reverse mortgage, you must complete the reverse mortgage counseling. In fact, your reverse mortgage application cannot be processed until after you have done the counseling and have been issued a certificate of completion.
If your counselor does not believe that you have an adequate understanding of the reverse mortgage — how it impacts your situation and your responsibilities as a borrower — they will not give you the certificate of completion.
If you have not already worked with a counselor, your lender is required to give you a list of counseling agencies. Five of these agencies must be in your area or state and one needs to be within a reasonable driving distance. However, the lender may not contact them on your behalf or pay for their services. Lending regulations prohibit lenders from even recommending which counseling agency to work with.
You can also find a counselor on the HUD web site: Search the HECM Counselor Roster to find a HECM counselor near you, or call (800) 569-4287.
You may also contact a HECM counselor from FHA’s National HECM Counseling Network. These counselors provide both face-to-face and telephone counseling nationwide.
Counseling can range from $85 to $130 depending on the agency. Some agencies work through government grants and may be able to subsidize the cost of your counseling. Some lenders may be willing to help you pay for your counseling through closing costs.
Yes. It is possible. All HUD approved counseling agencies are forbidden from turning clients away if they are unable to pay.
Fee waivers may be offered to borrowers facing a financial hardship such as foreclosure, bankruptcy or if your income is below the poverty levels.
Learn more about reverse mortgages, get an estimate, or assess your suitability for the loan.
- Waive the $90 counseling fee for a limited number of older adults who are facing financial hardships such as foreclosure or bankruptcy, who are using respite care, or whose monthly income is less than $1,000.
- Allow a limited number of older adults to pay at closing if their monthly income is less than 200% of the federal poverty level ($1,945 for single homeowners and $2,621 for couples).
– See more at: http://www.ncoa.org/enhance-economic-security/home-equity/reverse-mortgage-counseling.html#sthash.TC6HTX3y.dpuf
- Waive the $90 counseling fee for a limited number of older adults who are facing financial hardships such as foreclosure or bankruptcy, who are using respite care, or whose monthly income is less than $1,000.
- Allow a limited number of older adults to pay at closing if their monthly income is less than 200% of the federal poverty level ($1,945 for single homeowners and $2,621 for couples).
– See more at: http://www.ncoa.org/enhance-economic-security/home-equity/reverse-mortgage-counseling.html#sthash.TC6HTX3y.dpuf
- Waive the $90 counseling fee for a limited number of older adults who are facing financial hardships such as foreclosure or bankruptcy, who are using respite care, or whose monthly income is less than $1,000.
- Allow a limited number of older adults to pay at closing if their monthly income is less than 200% of the federal poverty level ($1,945 for single homeowners and $2,621 for couples).
– See more at: http://www.ncoa.org/enhance-economic-security/home-equity/reverse-mortgage-counseling.html#sthash.TC6HTX3y.dpuf
