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May 13, 2016

Reverse Mortgage Information: Understanding Reverse Mortgage Counseling

Reverse Mortgage Information: Understanding Reverse Mortgage Counseling

To qualify for a federally insured reverse mortgage, also known as an HECM, seniors are required to complete one HUD-approved counseling session. This is one aspect of the loan process that tends to make seniors nervous. The term “counseling” can be a little intimidating. Fortunately, these meetings are much more casual and entirely more valuable than many people automatically assume.

What Seniors Should Expect During Counseling?

The term “HECM counseling” is somewhat confusing. Rather than actual counseling, these meetings are more like reverse mortgage information sessions. Borrowers have the option of meeting with a financial counselor either in person or over the phone, and each session typically lasts around one hour. Seniors should also be aware that one session can cost up to $125. However, seniors who are going through a financial hardship might be eligible for certain discounts. Unfortunately, while this cost can be financed into the loan, lenders cannot pay counseling fees for their borrowers.

During counseling, a counselor will answer the borrowers’ questions and provide them with important reverse mortgage information. Most counselors will explain the loan process and discuss the disadvantages of reverse mortgages. Seniors should also be prepared to discuss their different payment options. This is a great time for seniors to determine exactly how they want to receive their loan proceeds.

Once the session is complete, the counselor will send the borrower an HECM Counseling Certificate. This form confirms that the borrower has completed counseling and is ready to advance in the loan process. Once the lender has received this certificate, borrowers can complete their application and be considered for a loan.

How to Make the Most of HECM Counseling?

While counseling might seem inconvenient, it actually offers borrowers a valuable opportunity. During counseling, seniors have the chance to discuss important reverse mortgage information with an impartial third party. Counselors have no reason to try to sell seniors a loan; their only job is to offer useful advice and provide consumers with accurate, honest reverse mortgage information.

To make the most of counseling, seniors are urged to prepare any questions they might have prior to meeting with their counselor. Seniors should ask about their other loan options, and discuss whether now is the best time to take a reverse mortgage. Reverse mortgages are not the only loans that allow seniors to access their home equity. While a counselor cannot stop a consumer from getting a reverse mortgage, these professionals can help seniors determine whether they are a good fit for the loan. If another type of loan would be more beneficial, HECM counselors can guide seniors towards other loan products.

Seniors should ask take this opportunity to understand what goes into maintaining a repaying a reverse mortgage. Before further pursuing a loan, seniors should know when their loan will become due, and how to handle repayment. These are both important subjects that are often overlooked by seniors anxious to close their loan and receive their loan proceeds.

Upon leaving a counseling session, seniors should have a better understanding of how a reverse mortgage will affect them, their estate, and their future. HECM counseling is not meant to complicate the loan process. Instead, these services are designed to educate consumers and provide them with vital reverse mortgage information.

An article by Abby Reynolds

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