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 individuals over the age of 62 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 revenge 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 own 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 get a reverse mortgage on their home and use the cash 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 they’re not necessary. These scammers will then pressure these individuals into letting them handle the proceeds or becoming their power of attorney in the case of a family member, in which they have 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.
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 off 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
- Ask close family members for help
- Walk away from lenders who are pushy or attempt to pressure you
- Read paperwork thoroughly, ask questions and understand everything before signing
- Avoid spontaneous emails, calls and advertisements
- Make sure you feel comfortable with your lender
- 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
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.