NeighborWorks Blackhawk Region provides counseling for those interested in a Reverse Mortgage. A Home Equity Conversion Mortgage (HECM), or better known as a reverse mortgage, is a loan that allows you to draw cash from the equity in your home without having to make payments for as long as you live in the home. Increasingly popular with seniors who have equity in their homes and want to supplement their income, reverse mortgages are only available through an FHA approved lender, and a counseling session with a HECM counselor is required.
There are many factors to consider before deciding whether a reverse mortgage is right for you, and to aid in this process the HECM counselor discusses program eligibility requirements, financial implications and alternatives to obtaining a reverse mortgage and repaying the loan. The counselor will also discuss provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make an independent, informed decision of whether this type of loan will meet your specific needs.
When you meet with the counselor, she will help you with
- Understanding reverse mortgages, including their features, how they work, and what the impact is on you and your heirs.
- Determining if a reverse mortgage is appropriate to meet your particular needs.
- Explaining alternatives to a reverse mortgage.
- Understanding your financial and other needs for remaining in your home.
- Knowing about the availability of other assistance you may need.
Alternatives to a Reverse Mortgage
- Selling your home and moving to a more suitable residence
- Support services and public benefits that may be available to you in your community
- Other financial options
Frequently Asked Questions
- Why are Reverse Mortgages called “rising debt, falling equity”? Because your debt increases and the home equity falls.
- Why do I need an appraisal? To determine market value of your home.
- Why is the loan amount different than the lender’s estimates? Your loan at closing is based on the value of your home and the interest rate.
- What if I change my mind after I close? By law, you have three business days to cancel the loan.
- What are the annual expenses I will have with this loan? You are responsible for the property taxes, flood and hazard insurance premiums, any special assessments, such as association or condo fees.
- After I close, how soon can I access my line of credit? The lender can disburse funds to you after the three day right of rescission ends.
The Reverse Mortgage Counseling Process
- Call to schedule an appointment
- Counselor will collect information from you: name, address and other key information, including why you are interested in a reverse mortgage
- Counselor will mail you information
- Attend counseling session
- Receive Certificate of Completion
- Follow-Up with Counselor
Cost: $125.00 paid at time of counseling session
*if certain income requirements are met, fee is then invoiced to lender.