There are numerous reverse mortgage myths out there, and one of the most persisting ones is that these loans are predatory and take advantage of those who need money in their older age. This is patently false; not only are these loans helpful and their terms transparent, but those who are interested must meet with an independent, third-party HUD-sponsored counselor before moving forward with the reverse mortgage. Because of this, there are no surprises down the road and those who are eligible will know exactly what to expect from their loan. In today’s blog, Family Home Loan Texas talks about the importance of this meeting with a counselor and what to expect from it.
A Mandatory First Step
If you are interested in a reverse mortgage, you may think the first step is meeting with a lender. While you can talk to one, they are not allowed to provide you with any substantive information and will point you to a counselor. The lender cannot confer with you until you receive a certificate stating that you have completed counseling. This is to ensure you are not being taken advantage of and that you will have a full picture of what to expect from your reverse mortgage. While a lender should be able to direct you to this person, you can also search for one in your area using this tool from the U.S. Department of Housing and Urban Development (HUD)’s website.
What To Expect From Counseling
Once you find a HUD-Sponsored counselor, you will talk to them over the phone or in person. They will give you the full scope of how reverse mortgages work — they will cover your payment options, costs, interest rates, how taxes work, and the overall pros and cons. In addition to providing general information, your counselor cab also assesses your personal financial situation and help you determine if this route is right for your specific needs. They can also look up private and public benefits that could help provide you with the funds you need. Finally, they can point you in the direction of general financial services that can help with things like balancing your budget. Overall, the counselor will give you as much information as possible — not to sway you one way or the other — to help you make the decision that will best suit your needs. With all of this in mind, you can see that those who do decide on a Reverse Mortgage are doing so with ample information and resources.
You will have to pay for this counseling service, but if your income falls a certain amount underneath the poverty line, you can delay payment until a later date. Similarly, your payment can be delayed if you are facing foreclosure, disability, bankruptcy, receiving hospice care, or other similar hardships.
The Next Steps
Once you meet with the counselor, you will receive a certificate that indicates you’ve done so. This is an important, necessary part of your loan application, so be sure to hold onto it and have it ready along with the other documents you need. These will include financial statements that show you can cover the costs associated with a reverse mortgage. While you will not have to pay much, if anything upfront, you will still have to pay property taxes and maintenance costs, so these financial documents need to prove you are able to do so. From there, an independent appraiser will determine the value of your home, which is so the lender knows an appropriate about to provide you. Because your house is essentially leverage for the reverse mortgage, they want to be sure they aren’t giving more money than the house is worth. Because you will never have to pay back more than what your home is worth, the lender wants to cover themselves in case anything happens. The appraisal and loan package — including your certificate from the counselor — is then sent to an underwriter who makes sure everything is appropriate, accurate, and follows any relevant laws. Once all of this goes through, you will be able to sign your closing documents and then receive your funds within three days.
Choose How To Receive Your Money
One of the significant things your counselor will cover is how you can receive your funds. There are several ways to get them, and each suits different needs. If you need all of the money upfront, in a single lump-sum payment, your counselor will explain that you need a fixed-rate interest. This means that the interest rate stays the same for the duration of the loan. Alternatively, you could receive the money as monthly payments, a line of credit, or a combination of these. With this, you will have adjustable-rate interest, which means it changes over a certain amount of time. It is important to note that while interest will accumulate, you do not have to pay anything back until you stop living in the house.
While your counselor will provide all of these details, it is important to remember that regardless of the money you end up owing in the end, you will never be forced out of your house. The title remains in your name until you either sell it or it no longer becomes your primary residence. This is a major myth about reverse mortgages, but luckily it will be cleared up when you meet with the independent professional who explains all of these things. Overall, you will be able to remain in your house for as long as you want, so you can spend your retirement years comfortably at home, enjoying the funds you receive from the reverse mortgage.
Contact Us To Learn More About Reverse Mortgages
Once you meet with a counselor, we are here to help with all steps of the reverse mortgage process. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about a reverse mortgage loan and to receive a free, no-commitment consultation.