Looking for a reverse mortgage? Have questions? Read on to discover why counseling is important for reverse mortgages!
A reverse mortgage is a special type of loan that allows seniors to convert a portion of their equity into cash. Even though a reverse mortgage is a home loan, repayment is not required. A reverse mortgage can be used to purchase a home as well. Reverse mortgages are only available to seniors of a certain age, usually 62. The amount you can borrow depends on several factors such as age, interest rate, and the property value. Generally, the more your home is worth, the older you are, and the lower the interest rate, the more you can borrow. With a reverse mortgage you don’t make mortgage payments and the loan is not due as long as the house is your principal residence. The homeowner is still responsible for real estate taxes, insurance and other housing payments like utilities.
Why Is Counseling Important For Reverse Mortgages?
Not only is counseling required, it is a very important part of the reverse mortgage process. As a senior, it is important that you make sure you understand your options and do not let anyone take advantage of you. Do you understand the alternatives to a reverse mortgage? Do you understand the process? Do you know how to qualify? Are you aware of the tax ramifications of obtaining a reverse mortgage? How will your heirs deal with your estate? These are all questions you should investigate and discuss with your counselor before signing any paperwork.
How Do I Find A Counselor?
The Department of Housing and Urban Development, also known as HUD, is responsible for certifying housing counselors nationwide so that seniors and their families can obtain impartial and unbiased information about reverse mortgages. Reverse mortgage counseling is a mandatory part of the reverse mortgage application process and is generally completed just before or after completing the reverse mortgage application. Counseling can be done over the phone with one of the national counseling agencies or in person through a regional agency. Following the counseling session the counselor will mail proof of the counseling session to the reverse mortgage applicant. This certificate should be given to the mortgage company with the reverse mortgage application.
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