To be eligible for a federally insured Home Equity Conversion Mortgage (HECM), you must discuss the loan with a counselor employed by a nonprofit or public agency approved by the U. S. Department of Housing and Urban Development (HUD).
The counseling can be very helpful, so using this service can be a good idea even if you are thinking about applying for other types of reverse mortgages. The first step is to decide if you are ready for formal reverse mortgage counseling. These questions can help you decide if you're ready to take that step.
Are You Eligible?
Are you and all other owners of your home at least 62 years old?
Does each owner live in the home at least six months out of the year?
Is the home a single family residence, duplex, triplex, 4-unit residence, a condominium, cooperative, or a planned unit development (PUD)?
If you answered "Yes" to each question, then most likely you are eligible for a HECM. If you answered "No" to the last question, you may still be eligible if you live in certain types of manufactured housing. Only a reverse mortgage lender can determine for certain if you are eligible.
Could You Get Enough Money?
Could a reverse mortgage give you the amount of money you would need to get from it?
- If you now owe any money on a debt against your home, you would have to pay off the full amount you owe to get a reverse mortgage. But you could use money from the reverse mortgage to do that.
- Example: If you now owe $20,000 on a home equity loan and could get $100,000 from a reverse mortgage, you could use $20,000 from the reverse mortgage to pay off the home equity loan — which would then leave you with $80,000 from the reverse mortgage.
Finding a Counselor
You or your authorized legal representative can request reverse mortgage counseling. An authorized legal representatives can be a guardian, conservator, or a person holding a durable power of attorney who has been authorized to act in this matter by you.
Call AARP at 1-800-209-8085 (toll-free) Monday to Friday from 7 a.m. -12 midnight Eastern time, and ask for reverse mortgage counseling. The operator will use the link in the "Additional Resources" below to find a counselor from HUD’s National HECM Counseling Network.
Counselors in HUD’s National HECM Counseling Network provide in-person counseling in their local areas and counseling by telephone in other areas nationwide. This counseling generally takes at least one hour. When provided by telephone, it typically takes two or more calls.
Before talking to a counselor, make a written list of your questions and concerns. Ask your counselor to send you loan printouts in advance so you can review them before your counseling session, and then have them in hand when your counselor explains them to you.
Counseling agencies may charge a fee for HECM counseling, but they must tell you about it before the counseling occurs, and the fee amount must be based on your ability to pay. Agencies cannot turn you away because of your inability to pay, and they cannot refuse to counsel you if you fail to pay. The maximum allowable fee in 2008 is $125 or the actual cost of providing the counseling, whichever is less. If your counseling agency charges a fee, you can have it paid out of your loan proceeds just like other HECM fees, or you can pay it directly to the counseling agency.
AARP does not endorse any reverse mortgage lender or product.