Reverse mortgage counseling provides a ready source for government approved loan information. Other options also exist for personalized counseling.
Paying for reverse mortgage counseling is mandatory in a few situations. However, all people who consider applying may benefit from additional information. The cost of participation is negligible compared to the size of a typical home loan.
Mandatory Reverse Mortgage Counseling
A certain type of reverse mortgage requires all borrowers take an approved counseling course as a condition of qualification. Most notably, a Home Equity Conversion Mortgage (HECM) is insured by the U.S. government’s Department of Housing and Urban Development. As a condition for approval, all applicants for HECM loans must present a lender with a certificate proving completion of counseling sessions. Only counseling programs that are approved by the government are acceptable. These courses cost approximately $125.
Voluntary Counseling
The Department of Housing and Urban Development further recommends all people who consider a reverse mortgage participate voluntarily even though not applying for a HECM loan. The information provided by these programs includes a practical discussion of the advantages and disadvantages associated with various types of home equity loans. Because home values represent such a large portion of a typical retiree’s net worth, participation is highly recommended for all people who have remaining questions and nagging doubts about the process.
Legal Advice
Government approved counseling is not the only reliable source for reverse mortgage information. Private attorneys provide legal counsel and analysis based only on the best interest of each client. An attorney’s opinion may include options for potential borrowers to negotiate a better deal and point out potential tax complications. The cost of a one-hour consultation may be similar to the cost of government-approved counseling or slightly higher. Whether a slightly higher cost is worthwhile is a highly personal choice.
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