HECM Loan counseling is an essential part of any reverse mortgage transaction.
Those who tell any client otherwise are lying.
Reverse mortgage counseling is a safeguard against unethical practices, ensuring that consumers who apply for a reverse mortgage are fully aware of the in’s and out’s of the program. In addition, counseling makes sure that consumers are aware of their financial obligations, such as homeowner’s insurance and property taxes, before they sign on the dotted line.
Personally, I go over every document with the client face-to-face as well, even if they are have been to counseling. A successful reverse mortgage transaction is one in which the consumers fully understand what they’re getting and what they’re giving in return.
This is especially important in regard to non-borrowing spouses, who are either too young to qualify for a reverse mortgage themselves or are left off the loan for other reasons. Non-borrowing spouses must be present at counseling as well because they need to understand that, because they are not on the loan, if the borrowing spouse passes away or the home on the loan stops being their primary residence, the loan will become due and payable.
In order to repay a reverse mortgage, the home must be sold, either by the spouse, heirs, or lender, in order to cover the loan plus interest and closing costs. If there is any difference left over, after the loan is repaid in full, the balance goes to the spouse or heirs.
All this is explained during counseling, underscoring its importance.
The point is, counseling is an essential part of the HECM loan, not just for the borrower but also for the non-borrowing spouse. Their lives will also be affected by the loan so it’s imperative that they are present at counseling as well.
In truth, one of the benefits of the reverse mortgage changes is the fact that non-borrowing spouses will now be included on the loan, regardless of age, to minimize risk. Like everything else in llife, it’s not just black and white, there are a lot of gray areas.
In the future, non-borrowing spouses will be as well insulated as their spouse. They will be able to enjoy the benefits of a reverse mortgage without having to worry about the future should their spouse pass away or be unable to live in their primary residence.
There are many options available to you with a reverse mortgage and plenty of ways to use it during retirement. If you think a reverse mortgage is right for you, let us know at PS Financial Services by giving us a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire, we’re simply here to help.