If you’re planning on getting a reverse mortgage, you’ll likely need a reverse mortgage counselor. In most cases, such a counselor is required.
Here are answers to some common questions about reverse mortgage counseling.
1. Why do I need counseling?
The U.S. Department of Housing and Urban Development requires a certified counseling session for a federally insured reverse mortgage, also known as a home equity conversion mortgage.
"This is a very important financial decision for a senior citizen who wants to make use of the assets they have available until they die,” says Sue Hunt, housing counseling program manager at Consumer Credit Counseling Service of Greater Atlanta.
“We certainly don’t want to have seniors making decisions that aren’t well educated and well informed,” she adds.
2. Does everyone need counseling?
If you’re part of the majority of reverse mortgage borrowers choosing a federally insured reverse mortgage, you’re required to get counseling before you apply.
If your home is worth more than the $625,000 federal limit, you may want to apply for a reverse mortgage through a proprietary lender. In that case, you may not be required to get counseling, but it's generally recommended, says Peter Bell, president of the National Reverse Mortgage Lenders Association.
Some lenders may first suggest that you speak with their own consultants to learn about your reverse mortgage options, but it’s not the same as official counseling from an independent HUD-approved counselor who’s certified to work with you on your options.
3. How do I find a counselor?
Reverse mortgage lenders are required to provide prospective borrowers with a list of 10 reverse mortgage counseling agencies. Five of the agencies must be local, with at least one a reasonable driving distance from your home. The other five must be national intermediaries such as AARP.
At HUD's web site you can find national counseling agencies, as well as local HUD-approved counseling agencies. The counselors can meet face-to-face or provide counseling by phone.