The law mandates that you undergo a counseling session before you decide to obtain reverse mortgage.
You need to make sure that you understand the implications of taking out a reverse mortgage on your home and assets. Talking to a reverse mortgage counselor will provide you with all the relevant information that you need to enable you to make the best decision for you and your needs. This counseling is required by the Federal Housing Administration (FHA) and is a part of the reverse mortgage application process. This step typically follows the completion of your application form for a reverse mortgage.
The reverse mortgage counselor’s job is to keep you from purchasing a financial commodity that you don’t fully comprehend. These counselors are neither lenders nor financial advisors. His or her goal is to help you understand the options that are available to you. Your chosen reverse mortgage lender will not be able to provide you with objective information since they stand to gain from your purchase of their product. Therefore, a third-party counselor that is approved by the U.S. Department of Housing and Urban Development (HUD) who will not benefit from your decision either way is the best source of impartial information that you need to completely understand everything there is to know about reverse mortgage and review other options.
The counselor will explain how reverse mortgages work, your payment options, the costs involved with a reverse mortgage and the financial and tax implications of obtaining reverse mortgage.
The counselor will need you to supply him or her with all pertinent details regarding your financial standing and goals so that they in turn will be able to guide you appropriately. You have to provide such information as your name, address, phone number, the type of property you own and its worth, as well as any liens on your property, and the contact details of your reverse mortgage provider prior to your counseling session.
During the counseling session, the reverse mortgage counselor is mandated by law to go over several important points with you. He or she must inform you about the housing, social services, health and financial alternatives that you can consider as a substitute to the reverse mortgage. The counselor must also discuss what other options you have that will allow you to convert your home equity into ready money. He or she will also educate you about what possible effects that taking out a reverse mortgage can have on your finances and assets as well as your eligibility for government programs, such as Medicaid.
Access to Counseling
The Federal Housing Administration facilitates access to counseling for seniors who are contemplating obtaining a reverse mortgage. You may be able to acquire the services of a reverse mortgage counselor for free or at low cost. To make it easier for seniors, counseling can also be done by phone or in person. You can make use of the online database provided by HUD to find a reverse mortgage counselor near you.