HECM Counseling Is Mandatory

Government Reverse Mortgage

About 90% of reverse mortgages today are a product offered by the US Department Of Housing And Urban Development (HUD) called a Home Equity Conversion Mortgage (HECM). HUD reverse mortgages are insured by the Federal Housing Administration (FHA). You may hear this type of loan referred to as HECM (pronounced Heck'um), a HUD reverse mortgage, or maybe even an FHA reverse mortgage. Don't be confused; those terms all refer to the government reverse mortgage product.

Counseling Is Mandatory

HUD believes that reverse mortgages can be confusing. Over the years, some seniors who lacked understanding about the product have regretted their decision to use it. For this reason, HUD makes counseling a requirement prior to processing an application. HUD has trained counselors follow a specific program intended to fully educate applicants as well as answer their questions and offer them alternatives.

How to Find a Counselor

If you are already working with a reverse mortgage lender, your lender will likely have a list of counselors in your area. If you haven't yet selected a lender, you can find reverse mortgage lenders via this link. It is a good idea to talk to at least three lenders to compare costs and reverse mortgage rates.

On HUD's Website, you can do a zip code search for counselors listed under HECM Counseling Agencies. As demand for the HECM product increased, HUD needed to expand the number of agencies permitted to offer counseling. For this reason, you can find additional counselors through FHA. The agency has set up a National HECM Counseling Network made up, in part, of advocates for seniors such as the National Counsel On Aging and AARP.

How to Prepare for Counseling

Best Reverse Mortgage has developed a learning center with articles on all topics related to reverse mortgages. Read through all of the articles. Make a list of any questions or concerns you may have. Be prepared to share your list of questions at the time of your counseling appointment.

Prepare a monthly budget for your living expenses and a list of all your outstanding debts. It is helpful to have the debts listed in order of interest rate from highest to lowest. The HUD counselor will need this information to determine if a reverse mortgage can meet your needs.

Consider your alternatives. Would you be better off selling or renting your home? Could you take in a boarder? What about getting a part-time job? Do you have family you could live with or who could help you with money? The HUD counselor will ask you these or other questions about options that might be better for you than a reverse mortgage. Consider your options carefully.