Reverse Mortgages: Don’t Get Fooled!

Reverse Mortgages: Don’t Get Fooled!

You’ve probably heard a lot about reverse mortgages. There are a variety of types that have different requirements and payouts, so shopping around for the right option is important. It is also essential that consumers understand the potential for reverse mortgage scams. These issues can not only create a financial headache, but the long-term impacts can be devastating. Before you decide on a reverse mortgage program, understand these possible issues so you can steer clear.

  • Be wary of sales pitches. Be cautious when discussing your options with sales representatives. They may pressure you, using language that makes it sound like taking out a reverse mortgage will solve all your problems. They may try to sell you added items while suggesting that a reverse mortgage will allow you to pay for them. But if you weren’t already in the market for these items, these add-ons aren’t a good financial decision. Sales representatives may also suggest ways for you to invest that money, but be wary, as they may have a stake in these investments.
  • Don’t be bullied into rushing. A salesperson may also encourage you to act quickly. He or she may suggest that whatever deal they are offering won’t last — and that you must take advantage of it immediately. Again, reverse mortgages require a lot of thought and commitment, so rushing into the decision isn’t advisable.
  • Know when to walk away. Anytime you feel bullied into making a decision, or if you’re being pushed a service you don’t really need, take a step back. With a reverse mortgage, the decision shouldn’t be made because a third party is pressuring you. If it doesn’t feel right, say no. You can start over with another representative who better fits your needs.
  • How to report fraud. If you do suspect that a particular sales pitch is a scam or that it may be breaking the law, you can report it. First, let a counselor, lender or loan servicer know what is happening. The next step in the event of fraud is to file a report with the Federal Trade Commission, your state’s attorney general or the state’s banking regulatory agency.
  • Your right to cancel. If you decide to move forward but feel regret after doing so, you do have the right to cancel. With most reverse mortgages, you can cancel with no penalty within three business days of closing on the loan. This should be considered a last resort. You must notify the lender in writing, and be sure to send the notification as certified mail with a return receipt so you know when it is received. Keep copies of all paperwork. Once it’s canceled, the lender then has 20 days to return any money you’ve paid.
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