How to Find a Trustworthy Reverse Mortgage Counselor

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How to Find a Trustworthy Reverse Mortgage Counselor

Reverse mortgages may be used by seniors 62 and over to generate income for retirement. However, you must finish authorized reverse mortgage counseling before you may apply for a reverse mortgage. This counseling session is meant to make sure you are aware of the obligations and financial ramifications.

Finding a trustworthy reverse mortgage consultant may be made easier if you know what to look for.

Key Takeaways

  • With the help of a reverse mortgage, qualified homeowners may turn their equity into income.
  • The most popular kind of reverse mortgages, known as HECMs (home equity conversion mortgages), are supported by the federal government.
  • Before submitting an application for a home equity conversion mortgage, homeowners must undergo reverse mortgage counseling.
  • Homeowners looking for a reliable reverse mortgage counselor may use the internet tools provided by the U.S. Department of Housing and Urban Development (HUD).

How a Reverse Mortgage Works

Homeowners may access their home equity with a reverse mortgage, but it differs from a home equity loan or a home equity line of credit in other ways (HELOC).When a homeowner obtains a reverse mortgage, they may choose to receive a lump sum payment or a series of monthly payments that can be used to almost any obligation, including medical bills and regular living costs.

As long as the homeowner resides in the property, fees and interest are accrued on the reverse mortgage debt. The whole reverse mortgage sum becomes due and payable in the event that the homeowner sells the property, vacates the property, or dies.

A reverse mortgage that is guaranteed by the federal government is called a home equity conversion mortgage (HECM). For this kind of reverse mortgage, homeowners must:

Mortgage insurance payments are one of the closing charges and fees associated with HECMs (MIPs).The amount of equity you have in your house, your age, and the current interest rates may all affect how much you can borrow.

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The whole reverse mortgage sum can become due if homeowners’ insurance and property taxes aren’t paid on time.

What Does Reverse Mortgage Counseling Involve?

Before submitting an application for a HECM, a homeowner must undergo reverse mortgage counseling. You are responsible for picking a lender and setting up a meeting. When possible, HUD prefers in-person therapy sessions but also permit licensed counselors to provide phone sessions if a face-to-face encounter is not feasible.

Reverse mortgage advisors are required by HUD to go through a number of items with homeowners. When you meet with a reverse mortgage advisor, you may anticipate discussing:

  • Your financial situation and requirements
  • Features and operation of reverse mortgages
  • Financial obligations related to reverse mortgages
  • Costs associated with reverse mortgages, such as closing fees, interest, and mortgage insurance
  • The effects of a reverse mortgage on taxes
  • Reverse mortgage alternatives
  • How to recognize and stay clear of financial elder abuse and reverse mortgage scams

Counselors for reverse mortgages may get payment for their assistance. Reverse mortgage advisors are permitted by HUD to set “fair and usual” costs; however, they are not permitted to set fees that are higher than the amount of services offered.

Why then is this counseling required? Reverse mortgage counseling is intended to make sure that homeowners completely comprehend the terms of their reverse mortgage agreement. When a homeowner dies, they may leave debt for their successors to pay off even if they may not be responsible for it while they are still living in the house. Consider an alternative method of equity withdrawal if you’d prefer not to do that.

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A reverse mortgage amount might be paid off after your passing if you get life insurance and name your heirs as beneficiaries.

How to Find a Trustworthy Reverse Mortgage Counselor

Searching HUD’s directory of qualified reverse mortgage counselors is the quickest method to discover one close to you. Counselors must fulfill certain education and training requirements, as well as a background check, in order to be included on this roster. You may find a HUD reverse mortgage counselor online or by calling 1-800-569-4287.

You may also go through HUD’s statewide directory of intermediaries that provide HECM therapy if you’re looking to get in touch with a counselor who offers phone consultations. If you can’t arrange a face-to-face appointment, you may still discover credible businesses to deal with on this list, which is shorter than the reverse mortgage counseling roster.

Your counselor should provide you an informative packet and some other paperwork to assist you be ready after you’ve scheduled a reverse mortgage counseling appointment. These resources are intended to address any questions you may have regarding a reverse mortgage and provide a summary of its benefits and drawbacks. You will talk about your finances and the specifics of reverse mortgages throughout the session to see if acquiring one makes sense for you.

You’ll get a completion certificate after the therapy session. To proceed with your HECM application, you must have this. If you still have any unanswered questions regarding reverse mortgages, your counselor may check up with you later.


If a reverse mortgage counselor feels that a homeowner does not have a sufficient grasp of how a reverse mortgage operates, they may refuse to provide a counseling certificate.

What is HECM counseling?

For homeowners interested in obtaining a home equity conversion mortgage, HECM counseling is a compulsory counseling session. The counselor will go over the homeowner’s financial condition, go over the characteristics of reverse mortgages and their benefits and drawbacks, explain the expenses of reverse mortgages, and list the telltale signs of reverse mortgage fraud during this counseling session.

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Why is counseling required for reverse mortgages?

For homeowners and their heirs, reverse mortgages may have major financial ramifications. Reverse mortgage counseling makes sure that homeowners thoroughly comprehend the advantages and disadvantages so they can decide whether a reverse mortgage is the correct choice for them.

How does an HECM work?

A homeowner may turn their equity into income by using a HECM. While the homeowner occupies the property as their main residence, no payments are necessary toward the reverse mortgage debt. The principle amount, as well as any accrued fees and interest, become immediately due and payable in the event that the homeowner sells the property, vacates the property, or dies.

The Bottom Line

Some homeowners may benefit from reverse mortgages more than others. Reverse mortgage counseling may assist you in determining if this is a choice worth pursuing or whether a HELOC or home equity loan could be a better choice. The first step is to get in touch with a reliable reverse mortgage consultant, and HUD offers tools to help you in your quest. Following completion of counseling, you may start looking into the top reverse mortgage lenders to choose a lender to deal with.

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