Reverse Mortgage Counseling: What It Covers and Why It’s Required

Reverse mortgages can provide a dependable source of cash flow for older homeowners, but they do come with long-term obligations. That’s why the U.S. Department of Housing and Urban Development (HUD) requires every applicant to complete reverse mortgage counseling first.

This session helps you understand how a home equity conversion mortgage (HECM) works, what it costs, and whether it fits your long-term plans. Completing counseling early can help you determine whether a reverse mortgage is a good fit for your situation.

What is reverse mortgage counseling?

Reverse mortgage counseling is a mandatory session conducted by an HUD-approved housing counselor. These counselors are trained to provide unbiased information and must follow strict federal protocols.

Their role is to explain how an HECM works, discuss your responsibilities, and ensure you understand both the benefits and the long-term obligations. Counseling can be completed over the phone or in person, though the HUD recommends the in-person format.

Why is reverse mortgage counseling mandatory?

The HUD requires counseling for everyone considering taking out a reverse mortgage. This requirement is designed to:

• Protect seniors from predatory lending
• Ensure borrowers understand the loan terms, costs, and responsibilities
• Prevent misunderstandings that could lead to foreclosure

Counselors cannot recommend a lender or advise you on whether you should move forward as their role is strictly to educate you on your options.

What do you need to bring to your reverse mortgage counseling appointment?

It’s helpful to bring the following information to your counseling appointment:

• Your most recent mortgage statement
• Property tax and homeowners insurance information
• Income sources, like Social Security or pensions
• A list of monthly expenses and outstanding debts

What happens during a reverse mortgage counseling session?

Most reverse mortgage counseling sessions last between 60 and 90 minutes. The counselor will make sure you understand how the loan works and what you’re responsible for. You can expect the counselor to:

• Review your income, expenses, debt, and property charges
• Explain how interest and mortgage insurance accrue over time
• Outline your long-term obligations, including taxes, insurance, maintenance, and primary residence requirements
• Walk through different payment options, including lump-sum funds, monthly payments, and the line of credit
• Review fees and closing costs
• Identify potential red flags, like difficulty affording property taxes or insurance

Required disclosures and worksheets

During your session, the counselor will provide standardized materials created by HUD, which typically includes:

• An HECM counseling packet
• Loan comparison worksheets
• Amortization schedules showing how the loan balance grows
• Total Annual Loan Cost (TALC) disclosures

These worksheets help you visualize how equity changes, what the loan may cost over time, and how different payout options impact your home’s value.

Review alternatives to a reverse mortgage

The HUD requires counselors to discuss alternative solutions, even if you feel confident that a reverse mortgage is right for you. This helps ensure you’ve considered every option. Possible alternatives include:

• Downsizing or selling the home
• Applying for a home equity loan or HELOC
• Property tax relief or deferral programs
• Local senior assistance programs
• Benefits such as Medicaid, SNAP, or utility support

What happens after the reverse mortgage counseling session

Once counseling is complete, you’ll receive a certificate confirming that you met the federal requirement. Lenders cannot order an appraisal or begin processing your application without this certificate. You’ll receive a copy for your records, and the agency can send a copy to your lender upon request. Certificates are usually valid for six months.

Tips for getting the most out of reverse mortgage counseling

To make the session as productive as possible, prepare a list of questions for the counselor ahead of time. It’s also a good idea to invite your spouse, heirs, or financial advisor to join the call. Ask the counselor to walk through comparisons or amortization charts if anything seems unclear.

You should also discuss your long-term housing goals, like aging in place or eventually downsizing. These steps can help you better understand how a reverse mortgage fits into your larger financial plan.

The bottom line on reverse mortgage counseling

Reverse mortgage counseling is designed to protect borrowers and ensure complete transparency. By completing counseling early, you’ll be better informed and prepared for the next steps in the reverse mortgage process.