Obtaining a reverse mortgage is one of the financial strategies that retirees sometimes use to create a revenue stream for their later years. While a viable financial tool, choosing a reverse mortgage is no right for anyone. That is why seeking reverse mortgage counseling before making a decision is so important. The counseling actually provides several benefits, among them a clear understanding of how a reverse mortgage works, the process for determining if this type of mortgage arrangement is really in the consumer’s best interests, and what options are available from different mortgage companies.
One of the key benefits of reverse mortgage counseling is equipping the consumer with a clear understanding of how reverse mortgages work. While most people considering this type of financial arrangement may possess an overall idea, most are not familiar with the details of how the mortgage works. A competent reverse mortgage counselor will first educate interested parties on the basics of the arrangement, pointing out both the potential benefits in terms of providing a steady income stream in later years, as well as pointing out that there is the possibility for some drawbacks, such as possibly losing the home if certain events should take place. This basic education helps consumers to determine if they want to move forward with the process, or find some other way of creating a revenue stream for the retirement years.
Assuming that the consumer wishes to keep moving forward, the next phase of the reverse mortgage counseling will involve assessing the individual circumstances of the consumer and how a reverse mortgage would be helpful or possibly create some type of financial issues down the road. Here, the practical information provided during the first phase of the counseling is applied directly to consumer, making the process a little more personal. At this phase, there is a need to share some amount of personal information so the counselor can aid in helping consumers see clearly what a reverse mortgage can and cannot do for them. Here again, the consumer has the opportunity to determine whether or not a reverse mortgage is the best strategy in his or her unique circumstances.
Should the consumer feel that a reverse mortgage is the right way to proceed, the reverse mortgage counseling will often turn to helping consumers learn how to identify the best provider for this type of mortgage arrangement. At this juncture, the counselor will identify specific provisions that the consumer wants to make sure are in the terms of the reverse mortgage agreement, as well as some provisions that should be avoided as much as possible. Tips on how to research the background of a potential lender are also part of the reverse mortgage counseling at this stage, a measure that can help consumers to avoid getting involved with scam artists or legitimate companies that tend to have poor customer service track records, or even companies that are not financially sound. When managed properly, reverse mortgage counseling empowers consumers to know what to expect from a reverse mortgage, how to choose the right terms, and how to find the lender who is ethical, honest, and a trustworthy financial partner.