As a Senior Real Estate Specialist (SRES certified) I work with many seniors. Fortunately, they usually have a trusted family member involved who can support them through the process of selling their home. It is hard enough selling when you are in your 80s or 90s and living in a family home where you may have lived for 40 plus years but then trying to get all the details of the sale right on top of that can be overwhelming.
This can be ripe for a scam. You hear regularly of a senior who was taken advantage of in one way or another related to real estate. One that has popped up during the pandemic, according to the Consumer Protection Federal Bureau, is a reverse mortgage scam. I should say that I believe reverse mortgages can be the right choice in some circumstances. They allow a home owner to use the equity in their home to provide funds for their use without a monthly payment. The mortgage is due at the time the home is sold or the borrower moves out or dies. This can be a life saver for fixed-income seniors.
What isn’t the best choice is when a senior is pressured to take out a reverse mortgage to pay for expensive repairs or home improvements that may not be needed or to invest in something high risk.
These tips from the SRES website can help you avoid a reverse mortgage scam or problem:
- Don’t get a reverse mortgage just because a contractor says that’s the best way to pay for expensive repairs or home improvements.
- Reverse mortgage loan officers are not allowed to sell you investments or other financial instruments. Don’t plan to buy an annuity or make other investments with the money from a reverse mortgage.
- Talk to a few lenders before you decide to take out a reverse mortgage. If a lender says they are the only person you should talk to, that’s a warning sign, and it could be a scam.