When Lisa Kelly and her husband Jesse first heard they would have to complete a counseling session with a counselor before they could apply for their reverse mortgage loan, they were less than excited.
“At first, I didn’t understand why we still had to talk to a counselor,” Kelly explains. “We had already researched the loan, learned what the advantages were, and realized a reverse mortgage would help our plans for retirement. A counseling session after that seemed like a pointless extra step.”
But according to Urban Institute’s four-year evaluation, results show that the mandatory counseling session is far from pointless. The study, which focused on the impact of counseling on loan performance, showed that homeowners have already saved millions of dollars due to the useful information provided in a session.
There were a few positive effects in particular that have benefited homeowners in the counseling session. Since counselors are knowledgeable about opportunities available to borrowers, they are able to counsel homeowners on what would be the best option for their particular situation, whether or not the best option for them would be a reverse mortgage.
This results in homeowners who choose mortgage loans that would most benefit them, would best fit their situation, and would save them money. With a loan type that best fits them, it in turn results in a mortgage that is more easily sustained and less likely to cause a homeowner to default.
“Now I’m glad we were able to speak with a counselor before finalizing our reverse mortgage,” Kelly shares. “Comparing all our possible options further solidified our decision once we saw all the reverse mortgage advantages for our personal circumstances, and any doubt otherwise was put to rest after an unbiased and informative session with a counselor.”
An important detail to remember is that counselors are not affiliated with any lenders, and must also be approved by the U.S. Department of Housing and Urban Development (HUD). This ensures counselors remain impartial and non-biased, and work for the benefit of the borrower. With a set-up such as this, the reverse mortgage loan continues to thrive as one of the safest loan products in the mortgage industry.