HUD certified counselors educate all reverse mortgage applicants with the same impartial information either before or after completion of the application.
Mandatory Reverse Mortgage Counseling
It is a requirement that all senior homeowners complete a counseling session with a reverse mortgage certified counselor. The mortgage representatives are instructed to give fair and impartial information to all interested consumers. In addition to private lenders’ services, AARP, National Council on Aging, and Consumer Credit Counseling Services of Atlanta are just a few of the senior agencies that offer convenient reverse mortgage counseling sessions over the telephone. A standard fee of $125 is typical and cannot be paid by the lender. In some cases the applicants may decide to submit a hardship letter to reduce the cost of the counseling.
Reverse Mortgage Applicants
Those senior homeowners who are at least 62 years old may qualify for a reverse mortgage. The property eligible for this type of loan must be mortgage free or have a minimal balance. The equity that has accrued over years of making house payments will be calculated to ensure that a reasonable amount is available to be returned to the homeowners. Single family homes, condominiums, 1-4 unit structures where one unit is the applicant’s residence, and most manufactured homes are approved for a reverse mortgage.
Reverse Mortgage Structure
Homeowners who qualify for a reverse mortgage are offered several payment options. The repayment choices include a one time payment, an establishment of a line of credit, or monthly payments. The reverse mortgage money is tax free and is considered a loan and not income. The lender does not collect on the loan until the property owners move out or have deceased. At that time the home is sold and the proceeds go to the lender to satisfy the reverse mortgage agreement.
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