If you’re considering a reverse mortgage, you likely have questions — not just about how the loan works, but whether it’s the right fit for your retirement goals.
That’s where counseling comes in.
Before moving forward with a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, borrowers are required to complete a counseling session. This is one of several consumer protections built into the loan. While some homeowners view counseling as simply another step in the process, it’s actually an opportunity to gain a deeper understanding of how a reverse mortgage works, what responsibilities come with the loan, and how it may fit into your overall retirement strategy.
Understanding your options is an important first step toward making an informed financial decision. Here’s what you can expect from reverse mortgage counseling.
What Is Reverse Mortgage Counseling?
Reverse mortgage counseling is a required educational session for anyone applying for the loan. During the session, a HUD-approved counselor who does not work for your lender explains how the loan works, reviews potential costs and responsibilities, discusses available alternatives, and helps ensure you fully understand your decision.
Because a reverse mortgage involves what is often a homeowner’s largest asset, the counseling requirement is designed for your protection — to help ensure you receive clear, unbiased information before moving forward.
Why Reverse Mortgage Counseling Matters
A reverse mortgage can be a valuable addition to a comprehensive retirement strategy, but it’s not the right fit for everyone. Counseling is meant to help you evaluate how the loan aligns with your financial goals, housing plans, and long-term priorities.
According to Marci Stevenson, Retail Sales Trainer at Longbridge Financial, there are several key reasons why education plays such an important role early in the reverse mortgage process.
Understanding Your Ongoing Responsibilities
One of the most common misconceptions about a reverse mortgage is that homeowners no longer have financial obligations related to their property.
While you are not required to make monthly principal and interest payments on a reverse mortgage, you remain responsible for keeping up with obligations like paying property taxes, homeowners insurance, and maintaining the home.
Understanding these responsibilities upfront will help ensure your loan remains in good standing and can help avoid potential issues down the road.
Understanding How the Loan Balance Changes Over Time
Another important concept to understand is how the loan balance may grow over time.
Because monthly payments are optional, interest and fees accrue on the outstanding balance if you opt not to make payments.1 As a result, the amount owed may increase while available home equity decreases.
Having a clear understanding of this dynamic can help you evaluate how a reverse mortgage fits into your long-term financial plan and what it could mean for your estate or any heirs.
Gaining an Objective Perspective
Older adults are often targeted by financial scams, making independent education especially valuable.
Reverse mortgage counseling provides an objective source of information that can help you evaluate your options, recognize potential red flags, and make decisions based on facts rather than potential sales pressure, misinformation, or misconceptions.
What Happens During a Reverse Mortgage Counseling Session?
During a reverse mortgage counseling session, a HUD-approved counselor will walk through several important topics, including:
- How a reverse mortgage works
- The reverse mortgage products available to you
- Upfront and ongoing loan costs
- A Financial Interview Tool (FIT) assessment to help evaluate your ability to meet ongoing property-related obligations
- Alternative programs or resources that may be available
- Potential impacts on eligibility for government assistance programs such as Medicaid
- How repayment works and what it may mean for your estate and heirs
The session typically lasts about 90 minutes and may be conducted over the phone or in person.
Once the counseling session is complete, you’ll receive a certificate of completion. Your lender will require this certificate before moving forward with the reverse mortgage application process.
There is generally a fee for counseling, although some counseling agencies may charge the lender or offer reduced-cost or deferred-payment options. You can discuss this charge with the counselor and your loan officer to understand what, if anything, you will be expected to pay up front.
How to Prepare for Your Reverse Mortgage Counseling Appointment
Taking a little time to prepare can help you get the most value from your counseling session.
Gather Key Financial Information
Be prepared to provide the following information:
Income Sources
- Social Security benefits
- Pension income
- Retirement accounts
- Any employment or other income
Monthly Expenses
- Utilities
- Groceries
- Regular transportation costs
- Ongoing healthcare expenses
Property-Related Costs
- Property tax bills
- Homeowners insurance information
- HOA fees (if applicable)
- Recent home repair estimates (if applicable)
Existing Debts
- Credit card balances
- Auto loans
- Current mortgage information (if applicable)
- Other debt
Be Prepared to Discuss Key Topics
The counseling session is designed to educate — not to serve as a loan application.
You may discuss topics including:
- Different ways reverse mortgage proceeds can be received
- Upfront and ongoing loan costs
- Mortgage insurance premiums
- Borrower responsibilities
- Loan repayment requirements
Bring Your Questions
Writing down any questions you have in advance can help ensure you leave the session with the information you need.
Some common questions include:
- Will a reverse mortgage affect my eligibility for Medicaid or other assistance programs?
- What ongoing obligations will I need to maintain?
- How does reverse mortgage repayment work?
- How might the loan affect the equity remaining in my home over time?
- How will a reverse mortgage impact my heirs?
Remember Why Counseling Matters
It’s important to remember that counselors are neutral third parties who provide education and information. They cannot sell financial products or recommend a specific lender, and lenders are prohibited from participating in the counseling session.
Why Counseling Is More Than a Requirement
It’s easy to think of reverse mortgage counseling as simply another item on a checklist.
In reality, it’s an opportunity to gain clarity, ask questions, and better understand how a reverse mortgage may fit into your broader retirement strategy.
A reverse mortgage can help some homeowners access a portion of their home equity while continuing to live in the home they love. But like any financial decision, it’s important to understand both the benefits and responsibilities involved.
By taking the time to learn how the loan works and evaluate whether it aligns with your goals, you’ll be better positioned to make an informed decision with confidence.
If you’d like to continue the conversation, Longbridge Financial can help. Contact our team today to get started.
Not ready to chat just yet? Use our free reverse mortgage calculator to see how much you could qualify for.