Why you must have a reverse mortgage counseling certificate before entering a reverse mortgage contract.
Legal aspects that require you to have a reverse mortgage counseling certificate.
The U.S. Department of Housing and Urban Development (HUD) requires all borrowers who want to pursue government guaranteed Home Equity Conversion Mortgages (HECM) to attend a certified counseling session in order to obtain a reverse mortgage counseling certificate. The certificate is good for 6 months and must be presented by you to your lender of choice before the lender may begin the process. The counseling session usually takes up to 2 hours depending upon your questions. The session may be held in person or by telephone.
How do I find a reverse mortgage counselor?
All lenders are required to provide you with at least 5 counseling agencies that are approved by HUD and include AARP and the National Counseling on Aging.
What is the value of obtaining the reverse mortgage counseling certificate?
The counseling that you obtain is the best safeguard for understanding the pros and cons of the reverse mortgage before you even begin the process. During the counseling session, you will be informed by reliable sources about how a reverse mortgage works, the alternatives, the costs, total annual loan costs (TALC), impact upon your estate and your financial condition including the tax consequences. You will be able to decide whether this is the best option for you.
What you will need to provide to the counselor in order to obtain the reverse mortgage counseling certificate.
You will need to provide the counselor with the location of the property, information about each owner of the property, the value of the property, and any debts upon the property, your estimated income, the method of payout that you prefer and any other circumstances that you feel the counselor should be aware of.
The end result
The above scenario clearly illustrates that the reverse mortgage counseling certificate is the most important aspect of the loan process because it makes you aware of the pros and cons of such a financial commitment. It also gives you the various other options that you might want to consider. It allows you to go into the transaction with your eyes wide open. This is what the reverse mortgage counseling certificate is all about and it must be obtained before you can even proceed with the reverse mortgage application.
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