Get the facts about reverse mortgage counseling and why the federal government requires completion of a course. Find out who approves counselors.
The U.S. government requires mandatory reverse mortgage counseling in some situations. The requirement is designed to protect seniors who are considering refinancing. A counseling course should provide information about the options and alternatives available to access home equity during retirement.
Reverse Mortgage Counseling Requirement
A home equity conversion mortgage is known as a HECM. These types of loans require counseling according the U.S. Federal Trade Commission. In most situations, reverse mortgage counseling is approved by the U.S. Department of Housing and Urban Development. The purpose of counseling is to explain the costs of obtaining a HECM and alternatives available to seniors. A mandatory counseling course costs about $125 for enrollment. In addition, non-profit loan products offered to seniors may also have mandatory counseling requirements.
Estate Planning Advice
Seniors who consider reverse mortgages should carefully review all options before selecting a particular loan product. Estate planning assistance can be invaluable. A trusted independent counselor may explain the best uses for equity loans, how to minimize taxes during the life of the loan and reduce future estate taxes. Legal advice can be expensive, yet relying on legal advice is also essential to avoid future complications. A balanced approach is necessary. Government disclosures provide a valuable service yet are not designed to optimize individual results or reduce taxes paid to the government. The best result available in each situation depends on unique personal circumstances.
Using Equity for Advantage
Seniors who own substantial home equity receive the greatest benefit from reverse mortgage counseling. After years of making timely payments, the equity value of real estate may be the largest asset owned by a retired couple. Counselors should explain ways to use home equity responsibly during retirement to receive a lifetime benefit.
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