The borrower of a reverse mortgage is required to complete a loan counseling session. In most cases, this must be by a third party independent agency and generally a list of appropriate agencies is provided. The borrower sets up the counseling and completes the session. This can be scheduled online. A packet of preparatory materials is supplied for the borrower.
The purpose of the loan counseling is to ensure that the borrower has a full understanding of the reverse mortgage loan processes, benefits, requirements and potential disadvantages. It helps in determining the circumstances of the client’s situation along with the established financial needs. It also explains the features of the reverse mortgage along with all tax and other financial implications of the reverse mortgage.
Detailed information about monthly expenses and income amounts are reviewed and discussed as well as eligibility requirements, borrower responsibilities and how much the borrower may be eligible to receive. At the end of the counseling session, the counselor asks the borrower relevant questions that help to establish that there is a full understanding of the entire reverse mortgage process. Upon successful completion of the counseling, the borrower will fully understand the pros and cons of reverse mortgage.
The counseling is helpful for many retirees who are on the fence about whether or not this is a good option for them. There is no obligation to proceed after completing the counseling. It is a useful tool that helps both the lender and the borrower to make the final decision about whether or not to proceed.