FHA Home Loans and Housing Counseling
One type is intended for any potential homeowner and can help with advice on buying a home, how to avoid loan defaults, and help with understanding mortgage credit issues.
Another is intended for those applying for the FHA Reverse Mortgage program, also known as the FHA Home Equity Conversion Mortgage (HECM).
Only financially qualified borrowers aged 62 or older are allowed to apply for HECM loans, but the FHA HECM loan requires housing counseling as a condition of loan approval. Specifically, these loans require reverse mortgage counseling so that all parties obligated on these loans fully understands their rights and responsibilities.
FHA HECM Loan Counseling: Required
All applicants for FHA HECM loans must get reverse mortgage counseling from a HUD-approved housing counseling agency. Fortunately, the Department of Housing and Urban Development provides a locator tool so you can search for HUD-approved counselors by state.
Housing counseling in these cases may include how to avoid inflated appraisals, and understanding what can bring a loss of equity in the home, what can cause the HECM loan to be due in full, and how to maintain occupancy to remain in compliance with reverse mortgage loan requirements.
There are a number of things that can cause an FHA reverse mortgage to become due in full; borrowers need to know what those issues are and how to avoid them; that’s one of the goals of the mandatory FHA reverse mortgage counseling requirement.
FHA New Purchase Loans, Refinances, and Housing Counseling
Housing counseling is not required for new FHA mortgages, even for those who have never purchased real estate before. First-time home buyers should definitely use the HUD housing counseling locator and make an appointment.
It’s a very good idea to get a jump start on your house hunting journey with some good advice on how to avoid high interest rates, how current property values affect your transaction, getting the most from seller concessions, etc.
You can always learn something new about the home buying process and a housing counselor will definitely help you anticipate some of the expenses, problems, and solutions to common real estate buying issues. You’ll be glad you took the time to discuss your goals and questions with a trained professional.
Reverse Mortgages Are Ideal for Senior Borrowers
The Pros and Cons of Subprime Mortgages
A Streamline Refinance Simplifies the FHA Loan Process
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