Tips on Reverse Mortgage Loans
As the U.S. population gets older and older, we are beginning to hear more about reverse mortgage loans. Here is some helpful advice if you are considering one of these loans.Reverse Mortgages Explained
Reverse mortgage loans allow seniors to access their home equity to sustain their financial independence. Many respected lenders offer reverse mortgages, which are usually insured by the Federal Housing Authority (a branch of HUD, Housing & Urban Development). Unfortunately, though, there are also many predatory lenders that try to swindle seniors with reverse mortgages that have unreasonable terms and rates. Below you'll find some tips to help you avoid a reverse mortgage loan scam.
1. Don't take out a reverse mortgage with an estate-planning service.
Many of these services charge you a percentage of the reverse mortgage loans they issue just to explain the product to you. You do not have to pay for information about reverse mortgages. You can look at the HUD website for free information on these loans or call them. AARP provides similar information at no charge.
2. Avoid lenders trying to sell you another product along with the mortgage.
If the lender you're considering for your reverse mortgage loan is trying to push another financial product along with the mortgage, you should not do business with them. Common "package deals" by these scam artists include annuities or living trusts. Usually, the mortgage will cost you more than these so-called investments could ever earn.
3. Don't use a reverse mortgage to fund home repairs.
Companies that encourage you to get a reverse mortgage loan to pay for home repairs are probably not organizations that you want to deal with. Often, these lenders will refer you to another company to actually provide your reverse mortgage, but they will take thousands off the top in the process.
4. Review your reverse mortgage paperwork carefully.
Before you sign any documents, review the paperwork associated with your mortgage carefully. You want to be sure you're not borrowing more than you agreed upon. If you need help making sense of reverse mortgage loans, don't worry. Because of the complexity of the loans, HUD requires that you pursue pre-loan counseling from an independent, not-for-profit counseling service. You can fulfill this requirement via phone counseling as well.