For most people the home is their biggest lifetime investment. When a senior age 62 and over ponders to take a reverse mortgage loan against the equity of his long saved home, it is even more important investment with lots of long term effects.
Back in 1989 US Department of Housing and Urban Development ( HUD ) funded the first FHA - insured reverse mortgage program, called HECM. Since then HECM has become the most popular in the whole industry.
When a senior thinks the FHA - insured reverse mortgage loan, he has to meet the HUD - approved reverse mortgage counselor. His job is to help a senior to understand, how does the reverse mortgage loan work?
1. Does A Senior Really Need This Loan?
The important thing is, that these loans are quite expensive and their influences are long term ones. But of course everything depends on your situation and needs. If you need money for increased medical bills, then this may be wise to take, but if you plan a luxury holiday, then maybe not.
It is natural and very human, that you are first unsure and make questions. The job of the HUD reverse mortgage counselor is to understand and feel your situation and hopes. And to give guidance and calculations.
2. Can You Afford This Loan?
Once again, these loans are long term loans. If your plan is to live only a short period in your home, then this is not for you. The up-front costs are high and the amount you owe grows every month owing to the compound effect.
3. Does A Senior Really Understand All The Costs?
The HUD reverse mortgage counselor can advice and calculate for a senior the effects of all costs, such as: compulsory mortgage insurance, origination fee, title insurance, the title, county recording and attorney fees, the real estate appraisal, the survey and the monthly service fee.
As a senior understands from the items above the visit with the reverse mortgage counselor can offer only big benefits. The recommendation is, that a senior does this meeting as early as possible, because he can fulfil the information with another visit or by phone later on.