As I said in the previous post, anyone that intends to apply for a Reverse loan must first complete counseling with an HUD approved agency.
Originally this service was free and funded through Grants, but due to the increase demand for Reverse loans, it soon became very apparent that it would become necessary to charge a fee for this service.
As of this “writing”, most of the agencies charge $125.00 but it is refundable if the senior does apply for a Reverse loan. They will be given a credit at the close of Escrow for this upfront fee and the HUD Certificate for Counseling that they receive, is effective for 6 months in the event they don’t immediately apply for the loan.
Here is the second part of the article that I shared in my last post.
“Although many prospective borrowers already have some knowledge of reverse mortgages, having done their own research prior to the counseling session, Tetreault, who has been a credit counselor for 16 years and a HECM counselor for seven years, admits that the misunderstanding about the transfer of homeownership continues to be one of the most frequently asked questions during the counseling process.
“They are always surprised to learn they still, in fact, own the home even with a reverse mortgage,” she said.
No payments necessary?
The internet provides a wealth of knowledge on just about anything. With a few keystrokes and clicks, even unsavvy web browsers can find the most basic information on reverse mortgages to aid them in their quest for knowledge.
Unfortunately, not everything published on the internet is vetted for accuracy. So it’s not beyond reason to be naturally suspicious of financial products that offer extra cash flow without requiring a monthly payment in return.
“Most of the time, when seniors are coming for counseling, they are skeptical about why they are able to get this [reverse mortgage] loan and not have to make payments,” Tetreault said.
Tetreault’s job then is to clarify that the funds obtained from a reverse mortgage must be repaid at a later date, and that just because borrowers aren’t required to make monthly payments toward the loan balance, they are still required to maintain their property taxes and homeowner’s insurance.”
Jason Olivia/Reverse Mortgage Daily
Counseling is the most reliable resource for anyone considering applying for a Reverse loan, because the Counselor has nothing to gain be giving you honest information. Plus they cannot steer a potential borrower to any particular Lender.
If you wish a list of HUD approved agencies, please contact me and I will provide you with a list of them
I will share the remainder of this article in my next post.