Though the popularity of the reverse mortgage program is coming around, they still may not be for everyone. And even those who may be in the seemingly perfect situation to benefit from a reverse mortgage should still watch out for certain signs that may derail retirement, explained a recent article by USA Today.
One woman from New York tells her story of falling on hard times when her business lost a top client. She took out a reverse mortgage line of credit to allow her to pull money from the house when she needed it.
“The key to deciding if a reverse mortgage is right for you is finding the right company to work with,” the woman in the article explained. “My loan officer took the time to listen to my financial goals, and there was no pressure or sales pitch.”
The number of Americans who are financially strapped in retirement is growing each year. Social Security checks now average around $1,230 per month, according to a study by the University of Wisconsin. And that amount is not even close to enough to support someone in retirement.
But knowing exactly when to use reverse mortgage and how to spot scams during the process is vital to potential borrowers’ success, the article wrote.
For example, borrowers who are big spenders may want to think twice about taking out a reverse mortgage because it could just add to the problem as well as demolish his or her home equity.
“In other words: Be responsible with how and when you use the loan process, or a reverse mortgage could cause more problems than it solves,” Wade Pfau, professor of retirement income at the American College of Financial Services, said in the article.
In terms of reverse mortgage scams, there is a list of “gut checks” every potential borrower should go through before signing anything, explained Paul Fiore, executive vice president of retail lending at American Advisors Group (AAG) in the article.
Some of those checks include the borrower asking him or herself, does the lender take time to understand my situation and educate me? Has the lender given me the choice to choose my own reverse mortgage counselor, or do they try to select on for me? Is the lender asking me for money upfront? Are they pressuring me to sign a loan application before I’m ready?
Read the full article from USA Today.
Written by Alana Stramowski