by Kevin K. Johnson, CSA
A number of our Visiting Angels clients have asked us about Reverse Mortgages, particularly how and when they can best be used to help pay the expenses of seniors. As with most issues and opportunities, there are always pros and cons. I read an article posted at the National Council on Aging (NCOA) web site that I highly recommend to anyone considering a reverse mortgage. I’ve provided that informaiton below for reference.
from NCOA June 6, 2011
The FY11 budget eliminated funding for Housing Counseling, which includes federally mandated reverse mortgage counseling.
Reverse mortgage counseling helps older homeowners explore whether a reverse mortgage could help them stay in their home longer. It also provides information about other options, services, and benefits to help seniors stay independent.
Here’s why reverse mortgage counseling matters.
1. Older homeowners seeking reverse mortgages are often vulnerable.
Many older homeowners who are considering a reverse mortgage need to tap home equity due to urgent financial problems. They often face cash shortfalls due to health expenses, costly home repairs, or high existing debt. About half of these seniors have incomes less than 200% of poverty.
Counseling from an independent, HUD-approved counselor ensures that they have unbiased information to guide them.
2. Reverse mortgage counseling is more holistic than other forms of housing counseling.
- It’s preventative, offering help before a homeowner talks to a lender and explaining loan costs and borrower obligations, so seniors can make wise decisions.
- Counselors assess a wide range of options for clients, including eligibility for other services and benefits, their ability to live independently, and alternatives to reverse mortgages such as possibly selling the home and downsizing.
- Counseling may result in clients not pursuing a reverse mortgage because it’s not suitable for their particular situation.
- It includes a BenefitsCheckUp® analysis, so clients can discover if they’re also eligible for public and private benefits, such as Supplemental Security Income, food stamps, home energy assistance, or local deferred payment rehab programs.
3. Reverse Mortgage counseling encourages public/private solutions to seniors’ economic needs.
Counseling helps cash-strapped older homeowners access public benefits that can be an alternative or supplement to their reverse mortgage. By tapping into both public and private solutions, borrowers can live independently longer and get a better value from these loans.
4. Public funding removes the chance of undue influence and scams.
Public funding for reverse mortgage counseling—as opposed to lender funding—removes the possibility of undue influence on borrowers at a vulnerable time in their lives. Taking out a reverse mortgage is a big decision, so unbiased counseling is critical.
Those facing major life transitions can ill afford to make an irreversible mistake involving the disposition of their home equity—often their largest asset. Without timely low-cost counseling, these financially vulnerable seniors are more susceptible to scam artists.
For Reverse Mortgage Counseling — Make an Appointment
To schedule a counseling session, call toll-free (800) 510-0301.
Helping older adults examine their home equity options to stay at home
NOTE: If you or someone you know is considering a reverse mortgage, you must get counseling from a government-approved agency.
The National Council on Aging’s (NCOA) Reverse Mortgage Counseling Services Network is one of five national counseling groups approved by the U.S. Department of Housing & Urban Development.
A reverse mortgage allows homeowners aged 62+ to convert a portion of their home equity into cash while they continue to live at home for as long as they want.
Counselors are exam-qualified aging services professionals who can help you:
- Evaluate the pros and cons of a reverse mortgage for your situation.
- Apply for public and private benefits that can help you pay for needs like home energy, meals, and medications.
- Find services in your community that can help you stay independent longer.
There is no fee unless you choose to apply for a reverse mortgage. NCOA also waive the $125 counseling fee for older adults who:
- Are facing financial challenges such as foreclosure.
- Have modest incomes — under $20,000 for single homeowners and under $30,000 for couples.