Reverse mortgages serve a demographic that is more prone to declining cognitive abilities and falling victim to financial schemes, making it important that aging consumers know how to spot potential scams, according to an article published by Credit.com.
One tip the article gives potential borrowers is to shop around, which could be a good and bad thing. In some cases, borrowers may have met with one lender who was completely ethical and trustworthy but then go check out another lender who is a fraudster and somehow wins them over.
So shopping around is a good idea for potential borrowers, either way, but it needs to be combined with other tactics to decipher the good lenders from the bad ones, the article says.
Another tip for people thinking about getting a reverse mortgage is not to wait until they’re desperate and use it as a last resort, the article says.
“If you do plan on getting a reverse mortgage because you need the extra cash, it would be prudent to first speak with a HUD-certified housing counselor because there are other ways to pinch pennies,” the article says. “Waiting until a small issue becomes a big problem reduces your options.”
Steering clear of lenders who tell borrowers to get repairs on their home with a reverse mortgage is also very important, because this usually means they have an ulterior motive.
Even as a member of the reverse mortgage community, it so important to inform potential borrowers of unethical lenders who may be out there. This is because one fraudster who takes advantage of an older couple is going to bring the public back to where they were years ago when people thought getting a reverse mortgage would cause them to lose their home.
Read the full article on Credit.com.
Written by Alana Stramowski