Can I Get Remote Reverse Mortgage Counseling?

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Can I Get Remote Reverse Mortgage Counseling?

For older homeowners who wish to generate a second source of income in retirement, reverse mortgages might be a tempting choice. As part of the application process, you must undergo authorized reverse mortgage counseling if you’re especially interested in a home equity conversion mortgage (HECM).

Counselors are able to provide these services in-person or over the phone, according to the U.S. Department of Housing and Urban Development (HUD). Therefore, remote counseling is a possibility.

Key Takeaways

  • Homeowners may use a reverse mortgage arrangement to convert their home equity into an additional income source.
  • Home equity conversion mortgages are reverse mortgages guaranteed by the Federal Housing Administration (FHA) (HECMs).
  • Reverse mortgage counseling conducted by a counselor recognized by the U.S. Department of Housing and Urban Development is one of the prerequisites for receiving a HECM (HUD).
  • According to HUD regulations, approved counselors may provide their services in person, over the phone, or by videoconference.

What Is Reverse Mortgage Counseling?

Homeowners 62 years of age and older may use HECMs to access the equity in their houses without having to pay a lender a monthly payment. One of the main distinctions between reverse mortgages and home equity loans or lines of credit is this (HELOCs).The successful completion of reverse mortgage counseling is one of several requirements for HECM approval.

An authorized counselor will go through these topics during a reverse mortgage counseling session:

  • The borrower’s financial circumstances and requirements
  • Features of a reverse mortgage
  • obligations related to a reverse mortgage financially
  • Obtaining a reverse mortgage costs
  • Reverse mortgage alternatives
  • The costs and taxes associated with a reverse mortgage
  • Recognizing reverse mortgage fraud
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A homeowner will obtain a certificate after completing this counseling, which they will need to complete their HECM application.

If reverse mortgage counselors feel that a homeowner does not completely grasp their obligations with a HECM, they may refuse to provide a counseling certificate.

Can You Get Remote Reverse Mortgage Counseling?

HUD lays forth requirements for reverse mortgage counseling, including the location of counseling meetings. HUD says counseling services are available for:

In order to give HECM counseling in person, even in your home, if at all feasible, HUD highly urges authorized counselors to do so. It is believed that having a face-to-face meeting will enable a homeowner to engage more actively and will provide the counselor a greater chance to assess how well the homeowner comprehends the HECM program. Phone therapy should only be used as a substitute for in-person counseling, according to HUD guidelines.

In general, these regulations prohibit the use of Zoom or Skype for remote reverse mortgage counseling. The use of video and remote reverse mortgage counseling during the pandemic was made possible by special laws that Massachusetts’ legislature passed. However, this policy is anticipated to end on July 15, 2022.

You may utilize the online search tool provided by HUD to find a local reverse mortgage counselor who has been authorized.

The topics addressed are the same whether you choose for in-person or phone-based reverse mortgage counseling. Before the therapy session starts, your counselor must also provide you an informative packet and let you know how much it will cost. Reverse mortgage consultants are permitted by HUD to charge fees that are “reasonable and usual” and at a level that is appropriate for the services rendered.

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How to Prepare for Reverse Mortgage Counseling

The homeowner is in charge of setting up counseling for reverse mortgages. You must first locate a licensed counselor who provides remote (phone) therapy if that is what you choose. After completing that, you may arrange a therapy appointment.

The counselor need to provide you background materials before this session. These consist of:

Even though only one of you will be designated as the reverse mortgage borrower, if both of your names are on the home’s deed, you and your spouse must undergo reverse mortgage counseling.

You may go through these materials to have a better idea of what a reverse mortgage entails and to get any questions ready for your counselor. You may anticipate discussing topics including how a reverse mortgage generates debt, who is responsible for paying off that debt both during and after your lifetime, how much you might be able to borrow from your equity, and what you could spend in fees, interest, and taxes during the counseling session. You may use the information in this discussion to determine if a reverse mortgage is the right financial decision for you.

What is HECM counseling?

For homeowners who want to get a home equity conversion mortgage, HECM counseling is a compulsory counseling session. Before submitting an application for a HECM, homeowners must get a certificate from a reverse mortgage counselor who has been authorized.

Why is counseling required for an HECM?

For reverse mortgages sponsored by the federal government, counseling is necessary to make sure that customers understand the financial obligations they’re taking on. Homeowners and their heirs may face financial consequences from reverse mortgages, which should be thoroughly discussed during a counseling session.

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Where can I get reverse mortgage counseling?

A list of authorized reverse mortgage counselors is kept up to date by the U.S. Department of Housing and Urban Development (HUD). Your choices for receiving therapy may include in-person appointments or phone sessions, depending on the counselor.

The Bottom Line

If you wish to apply for a HECM, reverse mortgage counseling is necessary, and the best way to acquire it is in person. Think about how well this choice meets your requirements before submitting an application for a HECM. Your position could be better served by a home equity loan, a HELOC, or even a cash-out refinance. Spend some time online comparing the top reverse mortgage providers. By doing this, you may have a better understanding of the potential cost of a reverse mortgage and which lender provides the best conditions.

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