Reverse mortgages can help you stay in your home and even add to your monthly income. All you need is to be over 62 years of age and have enough equity in your home. Before you can take a HUD backed home equity conversion mortgage (HECM) reverse mortgage, you will need to go through a counseling session.
A reverse mortgage may be easy to qualify for, but it is a complex loan. Consider how a reverse mortgage fits into your long-term retirement financial plans.
Reverse mortgage counseling
Reverse mortgage counseling is an important step in taking a reverse mortgage. Here are the recommended steps:
* Prepare your finances: Prepare your budget and retirement finances, including a look at your assets and cash flow. Your home is an important asset, so you should be sure you use your home’s equity wisely. Here are some of the questions to ask yourself:
* Do you want to stay in your home? For how long?
* Do you need additional monthly income?
* Do you need money to pay off old debts?
* Do you want a lump sum to improve your home?
* How important is it for you to leave equity to your children?
What to expect in reverse mortgage counseling
Reverse mortgage counseling will help you understand how a reverse mortgage works, the pros and cons of a reverse mortgage, and how the reverse mortgage fits into your personal financial situation.
By having these materials available, you can expect to understand how much funds you will have available and how much you will owe on your house:
1. Loan comparison page: This should include an estimate of the amount of loan available under different programs and summarize interest rates and how adjustable rates work (for example margins and ceilings).
2. Total annual loan costs: This should explain how much you will owe, how much in fees you pay, and how much equity you will have, based on varying assumptions of house appreciation.
3. Amortization schedules: This is a year by year summary of how much interest accrued, how much line of credit you have available, and net equity (based on different projections of property value).
Getting a reverse mortgage counseling session
Almost all reverse mortgages today are insured by HUD. HUD requires that every borrower attends a reverse mortgage session and receives a reverse mortgage certificate, before making a full application.
A reverse mortgage counseling session costs about $125 and can be done on the phone or in person. Make sure that they are on an approved HUD list. Melanie Sedam of ReverseMortgage62AZ.com can send you a list of the licensed HECM counselors in your area.
Watch and learn about a reverse mortgage at www.ReverseMortgage62AZ.com.
Questions? Contact Melanie Sedam at 866-549-3900, 520-829-5219 or [email protected].