What Are Some Reverse Mortgages Red Flags? Read below to understand some of the red flags to look for in regards to reverse mortgages!
In recent years, one of the most common financial products for senior citizens has been a reverse mortgage. A reverse mortgage can be a great product for those that want to stay in their home, but need money. However, a reverse mortgage is a confusing product and often can come with red flags that need to be noticed.
High Fees
One of the most common red flags of reverse mortgages are high fees. Reverse mortgages come with a lot of fees, which include legal fees, underwriting fees, and other bank fees. While fees are typically high for these loans, they are capped. Banks are not allowed to charge more than $6,000 in origination fees. If you are being quoted more than that, then you should consider the fees a red flag and the loan should be avoided.
Re-Payment Requirement
The second of the most common red flags of reverse mortgages is the re-payment requirement. Reverse mortgages will require you to live in the home that is securing the loan. In the even that you move out of the home or pass away, the reverse mortgage loan will need to be repaid. While this is a general rule, you should review the rules governing re-payment. You need to make sure that you will have a reasonable amount of time to sell your home if you move.
Misrepresentation
The third of the most common red flags of reverse mortgages to avoid is misrepresentation. In recent years, reverse mortgages have become common. Because of this, some people have become victims of fraud. In no event would a federal employee call you to solicit a reverse mortgage. If you are solicited, then you should stop communication immediately.
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