Top 10 Reverse Mortgage Myths – Know The Facts

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Although reverse mortgages continue to grow in popularity amongst seniors and retirees, there are still some top reverse mortgage myths floating around, that we’ll aim to debunk in this article.

Myth 1. – The bank can take over the house OR the borrower can lose the home.

One of the best securities of a reverse mortgage is that the borrower keeps all rights to the home for as long as the reverse mortgage lasts. As long as all property taxes along with insurance are paid on a timely basis, and the home is kept in a good living condition, the borrower can in no way be manipulated or forced out of his or her house.

Let’s say there are two borrowers (like you and your spouse, for example) then once the last surviving borrower either moves out of the home or passes away, the loan becomes due for repayment. Another thing to remember is that some houses with a reverse mortgage still retain some equity even on their date of maturity (date on which a mortgage loan has to be paid in full). In this case the borrower or his/her inheritors can choose to sell the home to repay the loan and safeguard the equity for the advantage of the borrower or his/her estate or heirs.

Myth 2. – The home must be paid off in full or it has to be debt-free to be eligible for a reverse mortgage.

Reverse mortgages basically do one thing: they take the perceived value of your home (home equity) and convert it into cash. As long as there is enough equity or value in the home, the property owner may meet the criteria for a reverse mortgage. As a matter of fact, there are many seniors who actually use a reverse mortgage to pay off a current mortgage they have, in order to do away with a mandatory monthly mortgage payment.

Myth 3. – When a reverse mortgage is due for payment, the bank will sell the property.

If you read Myth 1 again you’ll learn that this is another top reverse mortgage myth. As long as all tax and insurance payments on the property are made the borrower (home owner) retains title. The borrower is in control of the home not the lender or the bank for that matter. Usually, in most cases what ends up happening is that if the borrower wants to move or passes away, either the borrower or the heirs end up selling the home to repay the loan. However, this decision is dictated by the borrower or the heirs. If they please they are also free to use any other method to repay the loan – for example they might consider refinancing it, which is paying off an existing loan with a new loan, usually of the same size and uses the same property (the house secured by the reverse mortgage, in this case) as a guarantee.

Myth 4. – Moving to a smaller house is more cost-effective.

Moving might be right for various reasons such as wanting to downsize, live a more simple life, avoid maintenance and landscaping costs, move closer to family and more. But moving, solely based on the fact, that this might be cheaper for them to do, can be part of the tops reverse mortgage myths list. As seniors and retirees, you must weight out and examine your costs vigilantly before making this guess. Selling a home and then moving into another home, even though smaller, can be a costly matter. The approximate real estate commission on a three hundred thousand dollar home of 6% would run you down at least $18,000. Not to mention packing and moving costs, finding another home, and the effort and time involved in doing it. It might be a decision that sounds easy at first, but one you have to think about.

Myth 5. – What about my children? Reverse mortgages and your heirs.

Before plunging into a reverse mortgage – talk to your kids. You might be pleasantly surprised that many children might actually be happy with the prospect that their parents are financially independent at this stage in their lives. Most retirees or baby boomers have to plan for retirement or pay off their children’s education so a reverse mortgage helps them do that by providing a monthly stream of income or a lump sum amount. Plus if you and your spouse are healthy and continue to live in your home, the extra money might help you take that dream vacation you always wanted, without the kids!

Myth 6. – The borrower might end up owing more than what the property is worth.

This is one of the biggest top reverse mortgage myths out there. The best part of a reverse mortgage is that the loan is structured to protect the borrower. So basically, the borrower or his/her heirs or estate can never owe more than the equity on the home when the time comes to repay the loan. Also under the umbrella of the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration insures all Home Equity Conversion Mortgage (HECM) products.  This reverse mortgage program is a “safe plan” that is provided to seniors to cash out some equity from their home and in turn gain greater financial security.

Myth 7. – Reverse mortgage income will affect Medicare and Social Security payments.

In most cases, a reverse mortgage should usually not affect standard Social Security income or Medicare benefits. Each borrower’s situation is different and a reverse mortgage may affect certain other benefits like Medicaid. Therefore, before assuming anything, it is highly recommended that the borrower speak to any government authorities or agencies and have a face to face meeting with their financial advisor.

Myth 8. – There are limitations on how the cash proceeds are used.

In reality, there are no reservations with what you can do with the money. The cash received from a reverse mortgage can be used for anything you please. Although it is recommended you speak to your financial advisor to plan for retirement, you can do anything including pay off any debts, help your kids out, travel, and even make those frivolous purchases you’ve always wanted.

Myth 9. – Taxes will need to be paid from the proceeds of a reverse mortgage.

This is another top reverse mortgage myth. When you take out a reverse mortgage, the cash proceeds you get back are essentially you own money, therefore they are tax free.

Myth 10. – Reverse mortgages are only for needy seniors, or those that don’t have cash on hand but equity in their homes.

There are seniors with million dollar homes and those with houses well below that figure and both are benefitting from the reverse mortgage. Used as a financial tool, the reverse mortgage helps seniors plan their retirement and help live more comfortably.

We hope that these top reverse mortgage myths have helped clear any misinformation you had in your head about reverse mortgages. Consult with your financial advisor to help you decide if you plan to go in for one or not.

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How Reverse Mortgages Work

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How Reverse Mortgages Work – Reverse Mortgages Explained

Learning about how reverse mortgages work is a key factor in deciding whether you want to take out a reverse mortgage or explore other options. Let’s start with how a reverse mortgage differs from a conventional mortgage. The primary distinction between a reverse mortgage and a regular mortgage is that in a regular mortgage, you have a mortgage loan that you pay on a monthly basis and in a reverse mortgage, it is the exact opposite. In a reverse mortgage you get payments every month against the equity in your home.

However, here’s what you have to remember. The payment that you receive every month, or a lump sum amount, still remains a part of the mortgage loan. In a reverse mortgage you are therefore still required to pay off this loan. However, the real key to a reverse mortgage is that for as long as you continue to live in your home, you are not entitled to pay the loan back. So, if you move or stop living in your home, or in the event that you pass away, the loan must be repaid.

 

Another key factor in understanding how reverse mortgages work is understanding who they cater too. Reverse Mortgages are catered to seniors. So you need to be at least 62 years old and stay in the house as your main dwelling. You also have to own the house completely or owe a minimal amount on your current mortgage loan. This can usually be paid with what you get from the reverse mortgage itself.

A major plus point of a reverse mortgage is that it is tax free. Also, a reverse mortgage in general has no restrictions on the income you make. So in essence many seniors use reverse mortgages to support what they get from Social Security and Medicare. This gives many seniors increased financial security.

Another benefit of a reverse mortgage is that it also works towards purchases. So for example, let’s say you meet all the requirements, you can buy a home and not make a single mortgage payment on a month to month basis. This helps senior citizens to actually move closer to family and relatives if need be.

 

Once you learn how reverse mortgages work, you can benefit from them in many ways including getting a stream of monthly income that you don’t have to pay tax on, suspending a current mortgage payment, using the income for home care and long-term insurance, and also doing maintenance work and renovations to your home.

In a reverse mortgage the loan only becomes due when the home owner sells the home or dies. In this case, the house would then be sold to pay off the loan, plus interest and other fees, to the lender. If there is any remaining equity in your home, it belongs to you or to your heirs. So the bottom line is that in most cases the home cannot be left as part of an inheritance to children or relatives.

The home itself is also important in determining eligibility so it is important to understand how reverse mortgages work for that one factor alone. The acceptable property types include one unit single family dwellings, two to four unit owner occupied dwellings, certain condominiums and planned unit developments (talk to your lender for exact specifications) and certain manufactured homes.

According to the US Department of Housing and Urban Development, The Home Equity Conversion Mortgage (HECM) is a reverse mortgage program that is catered towards seniors to draw some equity from their home and in turn provide greater financial security – so in this sense it is seen as a “safe plan.”

You also have to look into how much money you can actually get from your home. The amount you can borrow depends on certain key factors. These include the age of the youngest borrower, the present rate of interest, the mortgage limit for your area or the sales price, the lesser appraised value of your home and the mortgage insurance premium that you choose.

Another factor to remember is that the older you are and the more value your home holds, the lesser interest you pay and the more you can actually borrow. If your spouse or partner is also a borrower the age of the youngest borrower is used to figure out the amount you are entitled to and can borrow.

In terms of  how reverse mortgages work with receiving payments, you basically have five options. The first option is that equal monthly payments have to be made as long as at least one surviving borrower continues to live in and occupies the home as their primary residence. The second option is you can choose a term for payments, meaning that you can set a fixed period of months in which you will be making equal monthly payments. The third option is the line of credit. You can make, at certain times, unscheduled payments or installments, until your line of credit is exhausted. The fourth option is you can choose a modified tenure. This in essence is an arrangement of line of credit along with monthly payments for as long as you continue to stay in your home. The last and fifth option is a modified term. In this option you can arrange to have a combination of your line of credit plus payments made monthly for a fixed number of months that is chosen by the borrower.

Reverse mortgages are not really a new concept, and have been around for many years. They started gaining attention in the early ’90s when the Federal Housing Administration (FHA) began underwriting the mortgages for repayment to lenders. But now they are slowly but steadily gaining popularity with an aging population wanting to tap into the equity of their home.

This kind of mortgage seems to be increasingly popular with seniors who see the loans not as an additional income to pay the bills but rather as a way to a better way of life.  Many seniors use the line of credit they get from their reverse mortgage to finance dream trips and take the cruise they’ve always wanted to go on.

Finally, if you are a senior looking at the option of a reverse mortgage, you should consider your age, the older you or your spouse are the more cash you can get as the loan supposedly will be a shorter time frame. Learning about how reverse mortgages work goes a long way in understanding whether a reverse mortgage is for you.

 

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Reverse Mortgage Alternatives

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Some people have asked me why a website that helps people get reverse mortgages would talk about the alternatives out there since it would mean less business for us.

To be honest, we’re not interested in trying to force you into something that’s not right for you.  If a reverse mortgage isn’t a good fit for you, that’s bad for you and for the company that helped you get it.

Plus, it’s just bad karma.

So here are some alternatives to reverse mortgages is you’re feeling like it’s no right for you.

Reverse Mortgage Alternatives

Reverse mortgages are a currently a key conversation topic among seniors and retired individuals, and those who are close to retire. The reason for this is that if you are at least 62 and owe very little towards the mortgage on your home, you are most likely to be eligible for a reverse mortgage through the Federal Housing Administration (FHA). The FHA’s reverse mortgages, are called Home Equity Conversion Mortgages (HECMs) in short, and are currently the most accepted and sought after option by eligible buyers today.

Here’s the major difference between a conventional mortgage and a reverse mortgage. A conventional mortgage requires you to make monthly payments until the debt is settled. In a reverse mortgage no payment is due on until you pass away, leave your home or sell it. Also, in most cases if you take out a reverse mortgage you can get an immediate upfront lump sum amount or a regular stream of income on a monthly basis. The way this is calculated depends on several key issues like your age (the older you are the better), present rate of interest (the lower the interest rate the better) and the actual value of your home (the more valuable your home is, the better).

To many seniors or retirees, it may seem that getting a big sum of cash that does not need to be paid while you still live is highly promising, there are several drawbacks, and reverse mortgage alternatives must be considered. The first one on the list is the cost incurred to get the reverse mortgage itself. Initiation fees, closing costs, service fees, mortgage insurance premiums among other costs can cost thousands of dollars. Also interest keeps building up until the loan is repaid.

A reverse mortgage should ideally be considered later on in your life, in your seventies or eighties, when you’re still healthy and want to continue to live in your own home. With other assets in hand, a reverse mortgage can essentially provide a welcome bump in income. Another reason to take out a reverse mortgage is if you are in financial distress, have a limited source of income and really need the money.

Since reverse mortgages have high costs to setup, you run the risk of paying those fees and for any reason if you are required to repay the loan in a short duration after taking it out you’re in real trouble. So, therefore it is key to consider all your options and certain other reverse mortgage alternatives before you dive right into setting up a reverse mortgage.

The first thing you need to do is to see what other resources you might have. Many people overlook this, but this is essential. You might have a good amount of cash in a life insurance policy that you can cash out. You might think about selling life insurance policies prior to them maturing. Have you considered borrowing from a 401K savings plans? There are also options where you can take a one time payment for letting go of up to fifty percent of the future increases in the price of your home.

You might also have some real estate properties that don’t really give you a regular stream of income, so have you considered selling them? There might be a possibility of you getting an inheritance. You might also be entitled to get assistance if your income is below a certain threshold.

Another reverse mortgage alternative to consider is refinancing. Refinancing is paying off a current loan with a new loan that is usually of the same size and uses the same property as a guarantee.

If you currently already have a mortgage on your home, refinancing at today’s fairly low mortgage rates can maybe help lower your payments and be a good reverse mortgage alternative for you. Refinancing might also be a more flexible option than a reverse mortgage if it allows you to take out cash provided through a refinancing.

Many seniors or retirees consider moving, and rightly so. When the kids have moved out that 4 bedroom two-tier home can be cumbersome to maintain and manage now and in the future. Many seniors consider downsizing and relocating. Also if you live in a classy area, relocating can help reduce living costs.  You might also decide to move for a quieter, simpler lifestyle.

If your finances are tight or you want to make a few extra dollars to pay the monthly bills, consider sharing your home. You might have a furnished basement with a separate entrance, or a spare guest bedroom in the house. You can try and find roommates who are compatible with your living style. The best option is if you share with a family member or a friend, and are open to the extra company.

Selling and renting is also a key factor many senior homeowners who need some extra income should think about. Renting might end up being a great reverse mortgage alternative for you. There are buildings and complete communities that accommodate renters over fifty-five years of age. Selling your home, that you’ve stayed in for a long period of time and one that has increased in value can give you the capital you need to not only live off renting your home but also use the capital for a dream trip you’ve always wanted to take. Plus when you’re renting you don’t need to worry about maintenance costs like snow shoveling in the winter and mowing the lawn.

In conclusion, there are several things to factor in before jumping into a reverse mortgage. If you consider the above options like refinancing, cashing out a life insurance policy, downsizing, selling and/or renting your home you may find that these reverse mortgage alternatives might be a better bet if you’ve just retired or are considering retiring soon. Without assets and in need of financial help in your late 70’s and 80’s, might be a better time to think about taking out a reverse mortgage.

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Benefits and Risks of Reverse Mortgages

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When deciding to go in for a loan of any kind and especially a reverse mortgage (with all its complexities) you need to weigh out both the benefits and risks of reverse mortgages.

Reverse mortgages are catered to a senior population. You have to be at least 62 years old and have none to small amount due towards the home you reside in currently. In this article we’ll explore the major benefits and risks of reverse mortgages.

Reverse mortgages have several perceived benefits. The most common reason most people go in for a reverse mortgage is that they get a monthly stream of income or a lump sum payment when taking out a reverse mortgage. To understand this let’s take a quick look at how reverse mortgages work. The main difference between a reverse mortgage and a conventional mortgage is that in a conventional mortgage, you have a loan to pay every month and in a reverse mortgage you receive payments every month against the equity of your house.

Another benefit is that a reverse mortgage is tax free. There are usually no income restrictions so many retirees use reverse mortgages as a financial security measure by using the income to support what they get from their pension plan and Medicare.

A reverse mortgage is also worthwhile to consider since it also works towards purchases. So if you are eligible you can buy a home and not have to make any mortgage payments monthly. This feature assists many seniors to move closer to family if required.

The first risk factor is that contrary to popular belief most seniors might not even be eligible for a major portion of borrowers. Many healthy seniors, with little to no assets who can’t pay their current mortgage might be rightful candidates. However, those with health issues who have plans to move into a care facility of some sort are at risk of taking out a reverse mortgage due to the sensitivity of their age and health.

Second, there are concerns over the pay-outs of the reverse mortgage earnings. Some borrowers make the mistake of taking all the equity out of their home rather than leaving it in a line of credit account to accrue interest. Many borrowers also misconceive that the reverse mortgage is really a bonus, when in reality it is actually a loan, and spend it on unnecessary life style purchases rather than on living costs.

Thirdly, many seniors fail to consider the upfront costs involved in taking out a reverse mortgage in the first place. Setup fees, closing fees, service costs and ad on costs can run you thousands of dollars. Also, until the loan is paid off, interest keeps accruing.

To conclude, there are several risks and benefits to the reverse mortgage. What you absolutely must do before deciding on how you want to deal with your finances is talk to a good financial advisor to see if a reverse mortgage is for you.

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Are Do It Yourself Wills A Good Idea?

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Nowadays you can learn almost anything off the internet that you can do yourself at home. We, being the independent, self-sustained type find do it yourself projects like changing the kitchen tiles or a creative at home wood-working project exciting. So are do it yourself wills a good idea too?

The simple answer is, no – do it yourself wills are not a good idea for most of us.

Why?

Simply because you have to realize wills are important legal documents. They involve legislation, property, assets and in some cases guardianship so are highly not recommended to be done by yourself if you don’t have legal expertise on don’t really know what you’re doing.

In the age of the internet you can actually download templates or buy software for do it yourself wills. You can even get them for free. You can take these blank templates and fill it with your pertaining information and you’re got your will ready to go.

Or do you?

The problem is that you really never know if the will you created is done properly until after you’re gone when it’s far too late to get it fixed.

You have to understand that even a will you create yourself is subject to probate. Probate is a court proceeding whereby your assets are evaluated in the public eye and transferred to your heirs. The catch is that you can’t really be sure the template you filled out contains all the key elements that need to be there to make it a legally binding document. Furthermore, if you live in the United States, probate laws vary from one state to another so what is considered valid in one state is not acceptable in another. Online templates are a one size fits all solution and don’t really address this key factor. Therefore, before you plunge into printing one at home ask yourself that are do it yourself wills a good idea after all?

The best advice is to search for a reputable probate lawyer who is familiarized with the laws pertaining to your state and can guarantee the validity of your Will. The language used to write a Will also has to be given importance, and rightly so. Lawyers know the kind of language that needs to be used in a Will that is hard to challenge, if it comes to that. If you write your own Will or download a blank template and fill it out you may not know exactly what kind of wording to use that leaves your Will vulnerable for potential attack. The last thing you want when you are dead is that what you intended to happen with your assets or possessions was not exactly understood – and all because you didn’t ask yourself , are do it yourself wills a good idea?  Should I really be doing this or rather spend some time and resources and get it done right?

So, unless you know exactly what you’re doing, do it yourself wills are an absolute no-no.

If you’re still thinking that are do it yourself wills a good idea, you need to go find yourself a good probate lawyer. Mistakes are often made by the layperson. Trying to save a few hundred bucks by drafting your own Will can have serious consequences and prove to be extremely costly years from now.

 

 

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5 Tips for Successfully Living on a Fixed Income

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Living on a fixed income can be hard if you don’t have good budgeting plans set in place. For many people including retirees and disabled people cutting down on unnecessary spending and knowing where your money is going can most of the time stretch your income.
Once you retire, the idea of having a fixed monthly income can seem a little frightening but if you had a steady job during your working years, in essence you already lived on a fixed or limited monthly income, sometimes even paycheck to paycheck, so you may find that you already have all the skills you need to have a fantastic retirement… nonetheless, we’ve provided a few tips below that will help you stay in the black every month.

Here are top 5 ways to control your spending and save money where you can and spend it where you should:

1)      Write down your expenses: This is really important. Most people spend and at the end of the month wonder where all their money went. When you buy anything, write it down. Ask yourself, do I really need this? You might find giving up that Starbucks coffee in the morning for a regular cup at home might save you quite a bit in a month.

2)      Save for a rainy day: Once you figure out where your money is going, make sure that your income covers all your expenses. To live successfully on a fixed income, you absolutely must have some money left at the end of the month to save. You never know when an urgent situation or crisis might arise.

3)      Think about inflation: You should definitely be concerned about inflation as it reduces the value of each dollar. And especially if you’re on a fixed income this gives you less bang for your buck. If you plan correctly you can strike inflation by making your savings grow faster. Talk to your financial advisor about putting some of your savings in stable investments.

4)      Is your income set in stone? Most people living on a fixed income are accustomed to thinking this is all I have to work with. But a little creativity can go a long way. Maybe you could have a garage sale? Do you have any antiques or collectibles you can sell? Maybe the government offers some extended benefits that you have overlooked? You can perhaps advertise some of things you no longer use on a free online classified site – free up the clutter and make some money at the same time.

5)      Live your dreams. Some people on a fixed income can get complacent. Some also complain that they never had a chance to take their dream vacation or do the things they wanted to do and can’t afford now on a fixed income. If this is you, have you considered a part-time job? This extra income can be a welcome bonus. You might not get your dream vacation but a weekend getaway could do the trick.

In conclusion, your present and your future matters. Any stage in your life you still have to plan for your tomorrow. Start saving a little today and gradually your savings will build. For successfully living on a fixed income you have to keep some money in hand for future expenses. Start small and build from there.

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Top 3 Estate Planning Mistakes

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Top 3 Estate Planning Mistakes

Let’s start with a quick overview of what estate planning is.  Estate planning very simply involves making plans for transferring your estate after you pass away. Your estate is all the property, assets or possessions that you own. It can include land, real estate, cash, clothes, vehicles, jewelry, and any retirement or other savings accounts you might have.

 

The main point of estate planning is usually to make sure most of your estate is transferred to its rightful beneficiaries.  Also, you’d want to pay minimal taxes and most importantly you have to assign guardians for minor children, if need be. Estate planning if done in an amateur fashion can prove to be quite costly for the people that you love.

Here are three estate planning mistakes that are ironically easy to avoid with a little planning and thought.

1)      Putting it on the back burner
Most people put estate planning on the back burner or save it for a rainy day but it is absolutely essential to get started with it now. You are free to set up Wills through a reputable probate lawyer or set up a carefully planned trust. If you don’t do this or procrastinate until it is too late the state legislation will step in and dictate who gets what, and your estate also ends up paying high taxes. All in all – a heartache for your loved ones.

2)      Till death do us part
The general population usually has very simple wills. These usually entail that when either the husband or the wife passes away all their assets go to the partner that still lives, and in the event that both of them die, all their property is transferred to their heirs, who are usually their children. For people, who have humble estates and possessions this is quite straight forward. However, for those whose estates exceed over two million dollars self-made or do it yourself wills can waste thousands of dollars in needless taxes. For a two million dollar estate this can cost you close to half a million dollars. So, it is highly recommended to see a good probate lawyer who will advise you how to cater your Will and bypass these extra costs.

3)      Set it and forget it?
Estate planning if done well is never really finished. Your situation, assets and generally your circumstances might change over the years and your estate plan needs to be kept abreast of them. Plan at least an annual review with your lawyer. This can save thousands of dollars and prevent distress.

In conclusion, estate planning mistakes can be avoided entirely if you take estate planning seriously. You need to take out time, sit down and plan today and then talk to a financial advisor. Once you have your plan in place make sure it is current and up to date with annual review meetings with your lawyer. Lastly if you read this and go about doing your current business I stress upon you to read item number one on top of this list.

 

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How to Avoid Reverse Mortgage Scams

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Have you been a victim of reverse mortgage scam or fraud? Do you know someone who has been ripped off thousands of dollars of their hard earned income? Unfortunately in our society today, scamming predators are waiting ready to prey on unsuspecting seniors and can literally eat up your lifetime savings. Be vigilant and read on to learn all you need to know on how to avoid reverse mortgage scams.

 

Learning how to avoid reverse mortgage scams is absolutely essential for anyone wishing to take out a reverse mortgage. You especially have to be careful if you are an older citizen as they are the ones who are most vulnerable to reverse mortgage scams.

 

Reverse mortgages are complex to set up so unfortunately many scammers can fraud unsuspecting seniors and retirees out of their hard earned life savings and quite literally, their homes.

 

They key to really know how to avoid reverse mortgage scams is to do your research in depth, before setting up your loan plan. You must learn and be aware of what it entails to get a reverse mortgage and what it is exactly. Having some prior knowledge in the subject matter will help you learn how to avoid reverse mortgage scams and the fraudsters who might pull you into them.

 

The first step that is highly recommended you take is to get proper counseling from a good advisor who knows their stuff. It is best to have a meeting face to face rather than on the telephone with a non-profit counselor who will work with you and will help you understand the different facets of this kind of loan. A phone meeting is not recommended as it is much harder to know how to avoid reverse mortgage scam on the telephone.

 

Another thing to watch out for is falsification. Falsification basically means that the lender deals with the company. In doing this he might take advantage and use the borrower’s name to get his hands on your credit. This can be done by presenting two checks from the loan or company giving the line of credit or by illegally using your signature. The best and safest way to avoid this sort of scam is to never sign any paper, blank letter or check.

 

You absolutely must shop around before you take out your reverse mortgage. You might even decide that a reverse mortgage is not for you and consider several reverse mortgage alternatives like refinancing, selling your home, downsizing, renting and more. But if you do decide to go the route of getting a reverse mortgage knowing how to avoid reverse mortgage scams will save you time, resources and your hard earned money.

One thing to remember is that most reverse mortgage loans have high set up costs. Set up fees, closing fees, service costs, and many other add on costs can end up costing you thousands of dollars. Also until you repay the loan, interest keeps getting accrued. You should make sure that the reverse mortgage loan that you choose has reasonable closing costs and mutual terms that you have agreed upon.

Home service companies are not really recommended as these individuals show you a lot of sympathy with you being a senior citizen. Do not be pulled emotionally and do not make a decision based on your emotions as fraud prevails in such situations. Use rationality and logic and talk to reputed advisor first who can maybe even recommend reputable companies.

 

However, there is a fine line here as if you feel that in any moment the counselor or advisor you are dealing with is getting obstinate, and pushy proceed with caution. They might be coercing you toward any particular lender, but you have to stand firm as this can be another sign to you of potential fraud and learning the signs will help you learn how to avoid reverse mortgage scams.

 

There are also certain firms who operate by giving supposedly “free services” in finding a good lender for you. In exchange they ask for, or rather demand, a particular percentage of your loan.

Please be extra cautious and avoid such situations at all costs no matter how convincing or lucrative they might seem at the time. These are illegal and can really cheat you out of your life savings.

 

Again it is best to talk to a non-profit advisor or a friend you know you can trust who is involved with real estate. Delaying financial decisions or postponing them for now is usually the best way to give yourself the time you need in learning how to avoid reverse mortgage scams.

 

A great service that is highly recommended you take advantage of to avoid any sort of scam is to look into services offered by the US Department of Housing and Urban Development, better known as the HUD. The Federal Housing Administration (FHA) offers reverse mortgages, that are called Home Equity Conversion Mortgages (HECMs) that are most popular among seniors. The HUD now offers contact information of trust worthy non-profit advisors who give out contacts of approved participating lenders.

 

Although the government is doing its share by signing legislation and establishing increased law enforcement to crack down on scammers to better protect citizens, seniors have to remain vigilant and watchful and follow certain practices on how to avoid reverse mortgage scams.

 

Many seniors are looking for a quick fix income solution to solve debt problems, and a reverse mortgage seems to be the most promising solution. Most social security payments do not pay the monthly bills, and unfortunately and sadly many who have worked hard all their lives have lost their retirement savings to the recession.

 

Sadly, the truth of the matter is that scams do exist.  They key is to always be vigilant, proceed with caution when it comes to dealing with financial matters and educate yourself about how to avoid reverse mortgage scams.

 

 

 

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