Dangers of Reverse Mortgages
There are dangers lurking in every corner even with mortgages. Do you know the dangers of reverse mortgages? There are frauds and scams that you need to be aware of so you do not lose your money. There are many reputable firms; but there are those that are fraudulent. These are usually fake sites that lure people in and charge huge amounts. Senior citizens can become a target because they are vulnerable. Information is free from HUD. These companies ask for 6-10 percent for names of lenders and filling applications. Do not sign a contract under duress from an agent.
A recent report by ASIC who interviewed 29 borrowers found that they did not understand how a reverse mortgage worked. They did know how long it would take to pay off the loan. There was no long term planning. They did not realize that this type of loan was only paid when the client died or moved into a long-term housing. This mortgage leaves borrowers with little money and unable to move into a long-term facility. On top of that, their family’s inheritance significantly dwindles. The lenders were not forthright about risks and talked the borrower into a higher amount.
Remember to get quotes from more than one lender. Look around, gather information from different sources, and compare them. This can help protect you and your estate. There are many frauds by phone, so be careful not to give out information. Keep your eyes open and beware of one of the biggest risks, foreclosure. You could find yourself in real danger and sleeping on the street! This is where buyer beware comes in. Make sure you read the fine print! Many of these documents are just adapted contracts. You could be in default for outstanding debts or uninsured property.
It is important to understand the dangers of reverse mortgages. If you have elderly family or friends make sure they know the facts and are not taken advantage of in a time of weakness. Make sure they look around, source out more than one lender, and compare the information. If not they could be left trying to re-pay an enormous debt. Lenders have to be fair too. They need to re-vamp their contracts to reflect changes. Older individuals need respect and should not have to take things on trust, especially if there is no trust there to begin with.
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Reverse mortgages can lead to big trouble - msnbc.com
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