What happens in HUD counseling, and do I have to go?
THE SHORT ANSWER
Yes. Before you can apply for a HECM, you must talk with an independent, HUD-approved housing counselor. The session usually takes about an hour, by phone or in person. The counselor doesn't work for the lender. Their job is to make sure you understand the loan, its costs and your alternatives.
What this means for you
It's a conversation, not a test.
- Have your home value estimate, mortgage balance and monthly budget handy.
- You'll get a certificate when you're done; lenders need it to move forward.
- Bring a family member if you'd like. Many counselors welcome it.
You can be on the call.
- It's a good time to ask about effects on heirs.
- Write your questions down ahead of time.
Counseling covers alternatives, not just the product.
- Clients can share your planning goals with the counselor.
- Counselors review how the loan affects means-tested benefits.
What the counselor covers
- How a reverse mortgage works and what it costs.
- Your obligations: taxes, insurance, upkeep and living in the home.
- Alternatives, like downsizing, local assistance programs or other loans.
- How the loan affects your heirs and any means-tested benefits.
Cost and finding a counselor
Some agencies charge a fee, and many will reduce or waive it if cost is a hardship. Find a HUD-approved counselor by calling HUD's housing counseling line at 800-569-4287 or using the search tool on hud.gov.
SOURCES
- HUD housing counseling: hud.gov
- HUD Handbook 4000.1, HECM counseling requirements
Rules change. This page is general education, not advice for your situation. Talk with a licensed professional before deciding.