Question:

How to avoid reverse mortgage scams?

Answer:

As reverse mortgages have gained such a great popularity among seniors, there have also sprung up a lot of reverse mortgage scams. You could easily fall prey to those if you are not aware of the most popular ones and instead of benefitting from the equity of your home you may jeopardize your successful retirement.

Luckily, most reverse mortgage scams have been identified and educating yourself about them is a great way to avoid those.

Some Reverse Mortgage Scams

Before signing a reverse mortgage agreement seniors are required to undergo reverse mortgage counseling. It is provided free from HUD - the department for home and urban development. However, there are real estate companies that will like to charge you a fee for up to 10 percent of the loan agreement! for free information you can get from HUD.

Another reverse mortgage scam is having additional exorbitant fees in the contract. You don't want to have those - read the contract carefully, take it to a counselor and discuss it even if you sign it. You still get the three extra days to pull off the reverse mortgage agreement right after you sign it.

Some companies will suggest you use your reverse mortgage to fund a big purchase. Usually, you should not use your equity that should go to your retirement for something else. Be it your favorite granddaughter's education, buy extra insurance or an expensive car. You simply should refrain from obtaining unnecessary big ticket items on the expense of your reverse mortgage.

Best Way to Avoid a Reverse Mortgage Scam

There is one way only. Get a HUD approved counselor to consult you free about any issues related to your reverse mortgage - from discussing and comparing different lender quotes, to choosing a lender, choosing the type of mortgage payments that fits best your needs and discussing what you are going to use the money for.

After you sign the reverse mortgage, discuss it again! You still can break the agreement in the three business days that will follow.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: