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Watch Out For These Reverse Mortgage Scams This Year

Loan Scams

Watch Out For These Reverse Mortgage Scams This Year


SmartAsset: Reverse Mortgage Scams to Watch Out For

A reverse mortgage can provide older homeowners with an additional stream of income in retirement. Reverse mortgages allow eligible homeowners to tap into their equity, without taking a traditional home equity loan. But are reverse mortgages a scam? No, but there are opportunities for scammers to defraud unsuspecting homeowners if you don’t know what to look out for. If you are considering a reverse mortgage, a financial advisor can help you consider different options and protect you against potential scams.

What Is a Reverse Mortgage?

A reverse mortgage is a financial product that allows homeowners to tap into the equity in their homes without taking out a traditional home equity loan or line of credit. Homeowners can use the money from a reverse mortgage to pay medical bills, consolidate debt or simply pay for day-to-day living expenses in retirement.

Reverse mortgages that are regulated by the federal government are called Home Equity Conversion Mortgages (HECMs). These reverse mortgage products are available to homeowners who:

  • Are at least 62 years of age

  • Own their homes outright or have paid down most of their mortgage debt

  • Have sufficient financial resources to cover property taxes, maintenance and other costs of upkeep

  • Live in an eligible property and use it as their primary residence

  • Are not delinquent on any federal debt

A reverse mortgage generally does not require repayment during the homeowner’s lifetime as long as…

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