Reverse Mortgage Counseling
A reverse mortgage can be a valuable retirement planning tool that can greatly increase retirees’ income streams by using their largest assets: their homes. A reverse mortgage allows homeowners to borrow against their home’s equity, while still maintaining ownership of the home. There are plenty of old, some true Reverse Mortgage Pros, Cons, Myths. They can be asked to your impartial counseling or to your loan officer. For your counseling. Click for Use Your Home to Stay at Home and CFPB What you should know and click for Counseling FAQs and Phone Numbers. We tend to make this as simple as possible.
The impartial Counseling answers your most common reverse mortgage questions during HECM Counseling session. It is also mandatory to help protect seniors from being uninformed about their decision. From an educational standpoint, Home Equity Conversion Mortgage (HECM) counselors are the first line of defense in the ongoing struggle to dispel the most common reverse mortgage myths and misconceptions.
Despite this dual effort on the educational front, and the wide variety of positive press from the mainstream media lately, several reverse mortgage illusions have yet to evaporate into the ether.
Borrowers, in fact, still own their homes. One of the most common misconceptions of reverse mortgages is that borrowers automatically relinquish ownership of their homes once they obtain a HECM.
Perhaps the result of negative media representation in the past, the lingering effect of this myth has obscured the truth about reverse mortgages among the public. The reality is often a pleasant revelation for seniors once they undergo HECM counseling.
“Seniors are under this misconception that they don’t own the home anymore—the lender does,” said Sherry Tetreault, a Tenn.-based certified credit counselor with Clear Point Credit Counseling.
Prospective borrowers may have to do their counseling by phone; currently in Alabama there is 1 counseling center open in Mobile. 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 home ownership 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 later, 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.
Clarifying what makes the reverse mortgage become due and payable creates some surprise among prospective borrowers, Tetreault said, but it also opens the door to other questions that seniors might not have thought about previously, such as what happens if they do not pay property taxes and insurance payments on time.
“We talk about what their responsibilities are as reverse mortgage borrowers to make sure they do not put themselves at risk of foreclosure,” she said.
The million-dollar question- HECM counseling is a necessary stepping stone in the older homeowner’s journey to get a reverse mortgage. This decision is typically prompted by a significant need, whether that is the result of an unexpected personal issue or even the intrigue of using home equity to supplement retirement wealth.
One of the things Clear Point Counseling does off-the-bat is ask how they plan to use the money they receive from a reverse mortgage; whether that means using these funds for daily or future expenses, paying off debt, etc.
In understanding what the loan proceeds will be used for, Tetreault said counseling can help prospective borrowers determine if a reverse mortgage is really the right product for them, or if there are other alternatives that might fit best with their financial plans.
At the end of the day, the decision to get a reverse mortgage hinges upon education and the awareness of what other resources are available to seniors that can help them accomplish their personal needs.
“Education empowers consumers,” Tetreault said. “Whether seniors take that information and decide to get the reverse mortgage or not, at least they are educated and understand all the choices and options available to to them.