Reverse Mortgage Counseling
One of the safeguards a reverse mortgage has is required face to face or phone counseling with an independent 3rd party. The cost is minimal, and is paid before any paperwork is signed. Counseling usually happens after meeting with a Reverse Mortgage Specialist.
The counselor is looking to make sure a senior homeowner understands how a reverse mortgage works and how it may benefit them in their golden years. For many homeowners the counseling session is a review of what the reverse mortgage specialist already covered with them.
For example, it’s important for seniors to know that they remain on title as an owner. There is never a Principal & Interest Monthly Mortgage payment required, one can be made as there is no pre-payment penalty, but it is optional. Of course, the borrower understands they must continue to live in the home as their primary residence, pay the property taxes, homeowners insurance, HOA dues and maintain the home so as not to be in default of the loan.
Homeowners also remember they can access their equity 3 ways: lump sum, monthly installments, a line of credit or a combination of all of the above if there is enough equity available. Since this is a loan, those funds are not taxed. And many recall that a reverse mortgage is a non-recourse loan, which means the only recourse the lender has for repayment is the home, not the borrowers, their estate or their heirs.
Many clients ask what happens at the end when the last borrower moves out. The loan balance is paid off by either sale of the property or refinancing the current balance. Some are concerned about not leaving equity for their heirs. However, with appreciation averaging 4% a year since 1960, and interest rates in the low 2% range, appreciation is growing at twice the rate that interest is being charged, which means there is a good chance there will be equity at the end.
As clients demonstrate clear thinking and understanding of how the reverse mortgage works, the counseling session ends up being a worthwhile endeavor.
Get to Know Kevin A. Guttman Reverse Mortgage Specialist
A reverse mortgage but it doesn’t have to be complicated when you have a professional help you along the way. Contact our team today to get the wheels in motion a (877) 251-9709
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