June 24, 2008

Reverse Mortgages - Don't Get Scammed

You've seen them. Seems like there are more and more advertisements for reverse mortgages every day on TV and in the paper. They make reverse mortgages sound like something that's almost too good to be true. It might be: the government reports that reverse mortgage scams are on the rise.

Before you even contact one of these companies, go to the US Department of Housing and Urban Development website and read everything they provide: some of these companies are asking people to pay for this free information. Don't pay for what's free! For example, HUD offers the "Top Ten Things to Know About Reverse Mortgages" at its site.

AARP has lots of good info on its website, too. AARP has information on how to decide between selling your home outright and opting for a reverse mortgage (the pros and cons) as well as five questions to ask yourself before considering a reverse mortgage.

Finally, the Federal Trade Commission is a great source of free information about reverse mortgages.

The FTC also warns Americans:

"Be cautious if anyone tries to sell you something, like an annuity, and suggests that a reverse mortgage would be an easy way to pay for it. If you don’t fully understand what they’re selling, or you’re not sure you need what they’re selling, be even more skeptical.

"Keep in mind that your total cost would be the cost of what they’re selling plus the cost of the reverse mortgage. If you think you need what they’re selling, shop around before you buy.

"No matter why you decide to take a reverse mortgage, you generally have at least three business days after signing the loan documents to cancel it for any reason without penalty. Remember that you must cancel in writing. The lender must return any money you have paid so far for the financing."

No comments: