Reverse mortgage is quite popular with the seniors. There are several reverse mortgage scams which is taking a toll over the economic conditions in the country. Get to know why these scams take place and ways you can save yourself from these scams.
Reverse mortgage is a special kind of home loan that allows seniors to convert the equity in their home into cash to help them carry out their daily expenses without going for any mortgage. They need not to pay back the loan until they leave the house. This type of mortgage helps the seniors to come out of their debt cycle and also get some financial help in their old age. Reverse mortgage is quite different from second mortgage and equity loan as the seniors are not supposed to pay back the loan as long as he/she resides at his/her home.
What are reverse mortgage scams?
Since seniors are gullible and can be easily persuaded, more and more unscrupulous lenders are convincing them into taking out reverse mortgages. It’s seen that reverse mortgage is good only for the present but later on the living descendants of the borrower are saddled with the burden to pay off the debts of this mortgage. There are several such lenders who apply higher interest rates and then when the descendants have to pay back the mortgage, they’re unable to because of the higher burden of unpaid amount. There are salesmen also who coerce seniors to apply for reverse mortgage for home improvement. But as per the new rules by the Federal Financial Institutions Examination Council (FFIEC), seniors will be informed about the norms of the mortgage and help them make better decisions. The seniors will also be given chance to decide whether or not they want to go for reverse mortgage.
How can you avoid reverse mortgage scams?
It’s of utmost importance to avoid reverse mortgage scams so that you don’t get into debts that you cannot come out of. Read on to know how you can avoid these scams:
1.Check the companies’ ratings : Just check whether or not the company is rated by BBB and whether it has got license to practice in your state. If you see any other accreditations of the company, be assured of the authenticity of the company. Check for the consumer complaints and other such stuff available in the site.
2.Get everything in writing : Just remember to get everything in writing if you get any work done in these companies. Get all the paperwork done and also keep copies of the details safely stacked in files. Get them with you whenever you’re closing the reverse mortgage deal. Check whether you getting what they promised.
3.Don’t get convinced : Try not to get convinced that easily and fast. Since, these scammers thrive on your gullible nature they think they can easily fool you. Don’t let them do it. Ask them every relevant question related to reverse mortgage and see whether they’re able to answer them well.
Before taking out a reverse mortgage, know everything about your lenders. Try to take out all the information from the Internet and government websites to save yourself from these scams.