What To Watch Out For

There are some organizations and individuals who attempt to profit by providing information to you that you can easily obtain for free from Mortgage Traders like this, as well as HUD, the AARP, and other reputable organizations. There is no need to pay anyone for information about how to apply for a reverse mortgage.

Some firms offer, for a fee, to put you in contact with lenders willing to provide you with a reverse mortgage. Some individuals, operating as estate planners, will recommend a reverse mortgage, and then charge a substantial fee, as high as 10 percent of the loan, to facilitate the application. Again, this is not necessary, and it is not recommended to use these types of services.

While it may be appropriate for a legitimate estate planner to recommend a reverse mortgage, it is unethical for that planner to charge an application fee or processing fee, over and above the standard fee for services. If you qualify for a reverse mortgage, there are plenty of available lenders willing to provide it to you, and you can find one quickly on your own, with little more than a copy of the Yellow Pages and a few telephone calls.

While brokers may provide useful services to people trying to find a conventional mortgage, especially if their credit is spotty, broker services are completely unnecessary and irrelevant when looking for a reverse mortgage.

HUD will provide you, at no cost, with a list of approved lenders and counseling agencies capable of providing you with all the information you require.

Be cautious of unsolicited offers for reverse mortgages, especially ones that may be offered door-to-door. Often these are being offered by scam artists who will charge steep fees and points. Avoid any lender who is not a member of the NRMLA. Also, be very cautious about any proposed equity sharing clause. These clauses may offer you a slightly higher return, but in exchange, if your home increases in value, you will be obligated to share the additional equity that accrues with the lender.