Reverse mortgage loans are practical resources designed to support seniors during their years of retirement. However, there are some potential pressures you should keep an eye out for. Let’s look at these reverse mortgages, how reverse mortgage scams work and the steps you can take to protect yourself.
What Are Reverse Mortgage Loans?
Reverse mortgages are home loans available to qualifying individuals 62 and older who use their homes as security. These financial resources are ideal for seniors who need help getting their hands on some extra cash during retirement, providing stability while keeping the home in their name.
Unlike traditional loans, homeowners don’t have to worry about making monthly payments on reverse mortgage loans. Instead, they’ll repay if they pass away or sell the house. Typically, you can get your hands on one of two reverse mortgage loans, the federally insured Home Equity Conversion Mortgages (HECM) and private proprietary reverse mortgages.
Be Aware of Reverse Mortgage Scams in Florida
Reverse mortgages are designed to help you throughout retirement, providing income you can count on. However, some people may try to take advantage of your situation for their financial gain. If you’re interested in getting a reverse mortgage loan, it’s best to be able to recognize some of the most common reverse mortgage scams out there.
These scams include:
Foreclosure scams: Foreclosure scams target older individuals struggling to keep their homes. Scammers will offer a way out with the help of a reverse mortgage, even though this type of loan still requires expenses that could see the same result.
Equity theft scams: Appraisers, attorneys and loan officers work together to convince a homeowner that they have more equity in their homes than in reality. Once the individual decides to convert their equity into cash, these scammers will suggest a reverse mortgage. After handling all the documents and closing the loan, scammers leave homeowners with little equity and no cash after additional costs and fees.
House flipping scams: Reverse mortgage scammers will purchase a decaying, run-down property and fix it up just enough to look nice from the outside. They’ll then convince homeowners to use the cash from a reverse mortgage to purchase a new property.
Fraud by relatives or financial planners:This scam involves an untrustworthy financial planner or family member convincing a senior relative to get a reverse mortgage when it’s not necessary. The scammers then pressure these individuals into letting them handle the proceeds or become their power of attorney, which gives them full control to make the financial decisions and move the money into their accounts.
Vendor and contractor fraud: Contractors will voluntarily approach a homeowner, claiming to have noticed areas of the home that need improvements. After compelling them to get these repairs done, they will tell the homeowner that a reverse home mortgage is free money they can use for repairs. The likely result is unnecessary work done by an unlicensed contractor with the potential to cause additional problems.
Other Tactics Scammers Might Use
Reverse mortgage scammers use many methods to convince older homeowners to get a reverse mortgage. Here are a few additional tactics to watch out for:
Free income: Some people will tell seniors that reverse mortgages give free money without strings attached. In reality, reverse mortgages are loans that must be repaid.
Celebrity spokespeople: Some lenders use celebrities to make their advertisements more believable. While this could be legitimate, homeowners should still do their research.
Blank fields: A scammer may ask a homeowner to sign documents with blank fields. When they use blank fields, the scammer can fill them in later according to their desired terms.
Protect Yourself From the Most Common Reverse Mortgage Scams
Educating yourself is the best way to safeguard against reverse mortgage scammers. Conduct your research by reading articles, watching videos and asking questions. The more you learn about how these mortgages work, their requirements and how you can qualify, the better you’ll be at keeping scammers at bay.
During your research, you should also be looking for reputable lenders. You can do this by inspecting their reviews, exploring their website and checking their credentials. While searching for your credible lending officer, you should make sure they are:
Federally approved.
A member of the National Reverse Mortgage Lenders Association (NRMLA).
Accredited by the Better Business Bureau (BBB).
Licensed on the state and national levels.
Tips to Avoid Reverse Mortgage Loan Scams in Florida
Reverse mortgage scams can be tricky to spot. If you’re planning on getting a reverse mortgage loan, consider the following tips:
Only talk to trusted experts.
Walk away from lenders who are pushy or attempt to pressure you.
Read paperwork thoroughly, ask questions and understand everything before signing.
Avoid lenders who won’t clearly explain the loan or how it works.
Be wary if people promise that a reverse mortgage can solve all your financial problems.
Stay away from those who tell you not to contact current lenders, financial advisors or real estate attorneys.
Make sure you feel comfortable with your lender.
Don’t accept payment for a home you didn’t buy.
Enroll in reverse mortgage counseling.
Never pay fees to receive reverse mortgage information.
Stay away from offers that are too good to be true.
Remember, you have three days to cancel a loan after it closes.
Factors to Consider When Getting a Reverse Mortgage
Overall, getting a reverse mortgage can have many benefits, such as enabling you to stay in your home and enjoy additional income. The dark side of reverse mortgages is that scammers often pressure you into getting this loan or make it sound like this option works for everyone. Here are a few things to consider to avoid reverse mortgage schemes and determine whether to get this loan:
Fees: A reverse mortgage will have upfront costs and ongoing expenses like interest. Account for these expenses as you plan to give yourself a better retirement.
Benefits: A reverse mortgage can raise your assets, which may impact your eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
Inheritance: Taking out a reverse mortgage can affect the amount left to your heirs (unless you advance inheritance from the reverse mortgage funds). Weigh the value of financial support now compared to the inheritance you leave behind.
Why Trust Senior Lending Corporation?
A reverse mortgage is an excellent option for some seniors, but you may face scams from certain lenders or financial advisors. Senior Lending Corporation is a trusted source for reverse mortgage education and services. Our specialists pull from years of experience serving the reverse mortgage industry. We are licensed advisors who partner with you, offering support throughout the reverse mortgage process.
Our company also holds proper licensing to offer mortgage lending services from the Nationwide Mortgage Lending System and various state-level organizations. We are accredited by the Better Business Bureau and hold an A+ rating.
Work With Trustworthy Financial Experts at Senior Lending Corporation
Your retirement should be filled with relaxation and excitement. At Senior Lending, we strive to give you the financial peace of mind you deserve during retirement. When you choose to work with us, you’ll receive honest and ethical services from a team devoted to helping find solutions perfect for your situation.
Senior Lending will be by your side every step of the way. If you want to learn more about how we can help you secure a reverse loan in Florida or avoid scams, give us a call at 800-822-1190 or contact us online today.
