The federally-insured reverse mortgage is extremely beneficial because it offers protections which other programs do not. Though these protections should hinder people from being able to take advantage of you, there are still some red flags for which to watch while pursuing your reverse mortgage!

Watch Out for These Red Flags Whilst Pursuing Your Reverse Mortgage

• Bundling Products – This would be if your reverse mortgage specialist attempted to sell you other products alongside your mortgage. In order to avoid this, you should not finance any non-closing related products or services when completing your loan. In October, 2008, it became illegal to finance other financial products through your reverse mortgage. (NOTE: After you close, the funds are your to do with as you please.)

• Forgery – Any person with whom you interact with on your finances has the ability to take advantage of you. Make certain you review your financial statements regularly so you notice anything that may seem out of the ordinary.

• Misrepresentation – No reverse mortgage lender should represent themselves as a government representative. Any lender who represents themselves as a government official should not be trusted. If you come across this, please report the individual to HUD as they have violated federal regulations.

• Paying for Reverse Mortgage Information – You should never have to pay for reverse mortgage information. The information you need is available for free from our specialists, as well as on the Department of Housing and Urban Development’s website.

• Inaccurate or Incomplete Information – You should not sign a document you deem to be incomplete or inaccurate. Though some paperwork may not be final and can be corrected later, this may not be the case. If you do not understand the document that you are asked to sign, your specialist should be able to explain it to you successfully. If they cannot, it may be wise to seek out someone who can.

• Downgrading Counseling – As part of applying for a reverse mortgage, you are required to attend counseling with a HUD-approved counselor. This gives you the ability to ask questions to a HUD-trained individual and to make certain you completely understand the contract into which you are entering. If your reverse mortgage specialist tries to discourage you from asking questions or downplay its importance, they may be acting against your best interest.

Though the federally-insured reverse mortgage is very safe and has continually increasing regulations to protect you, there is still a chance that an unscrupulous person could attempt to defraud you. Though these red flags give you some information about what to beware of during your reverse mortgage, if you have questions about anything that seems questionable, you should contact HUD.