If you’re applying for a HECM reverse mortgage, a session with a HUD-licensed counselor is the first step before your lender can begin processing your application.The reverse mortgage counseling cost can vary from one counselor to the next (or there may be no cost at all).
The purpose of counseling is to help ensure the applicant understands the program, is reasonably competent to make financial decisions, and isn’t being taken advantage of by unscrupulous lenders or family members. A counseling session must be completed, as evidenced by a valid counseling certificate, before a lender can start processing a reverse mortgage application.
How Much Does Reverse Mortgage Counseling Cost?
The reverse mortgage counseling cost is usually in the neighborhood of $125. However, I’ve had clients pay as little as $75 and as much as $175 for counseling.
It’s even possible the counselor won’t charge anything at all. Some agencies are non-profits and receive funding that can be used to cover the cost of counseling for applicants with financial hardships.
A Few FYIs About Counseling
Since you’re already here, let me fill you in on some things you should know about reverse mortgage counseling:
- A HECM reverse mortgage cannot be obtained without a valid counseling certificate. Once you pass counseling and receive your certificate (which is good for 180 days), the lender can get started processing your file.
- The purpose of counseling is to make sure you have a decent understanding of the program. FHA wants to make sure that reverse mortgage applicants have at least a relatively good understanding of what they’re signing up for before they sign up for it. The counseling also provides a check against unscrupulous lenders or family members who may be trying to take advantage of a senior. Most lenders will provide a list of licensed counselors in your area or you can find one on the HUD website.
- Counseling can usually be done over the phone. You’ll likely have the option to do your counseling over the phone, online, or in person. However, there are some states that require you do the counseling in person. Most counseling sessions last for 1-2 hours depending on the agency and your knowledge level.
- You can work with any HUD-licensed counselor that you wish. If one counselor is charging a high fee or can’t get you scheduled for an appointment in a reasonable time frame, you’re free to pick another one.
- Many counselors are non-profits and get government funding. You may find a counselor willing to do the counseling at no cost, but the trade off may be an appointment several weeks in the future. If you’re willing to pay, they may be willing to get you in sooner.
- The reverse mortgage counseling cost can often be rolled into the loan. If the counselor is charging a fee, you can request that it be rolled into the loan so that you don’t have to pay it out of pocket. If the counselor is OK with it, the lender likely will be as well. Not all counselors are willing to do this, but it doesn’t hurt to ask.
- Counseling can be done with a valid POA or conservatorship. It’s unfortunate, but some seniors are no longer able to make their own financial decisions or manage the paperwork involved in applying for a reverse mortgage. A trusted friend or relative can do the counseling (and reverse mortgage, for that matter) on behalf of a senior as long as they have a valid power-of-attorney or conservatorship is in place.
Where to Find Reverse Mortgage Counselors
Most lenders are happy to provide a list of licensed counselors in your area or you can find one on the HUD website. You may also be able to find reverse mortgage counselors in your area with a simple Google search.