Whether you are on the fence about getting a reverse mortgage or already have your mind made up, it is important that you are not taken advantage of by agencies. Many dishonest agencies are out there simply to take your money, and scams are abundant in the industry. To be properly prepared, you must know exactly what you are looking for and the common tricks that these agencies try to pull.
Always do your research. Two of the most important decisions you will have to make are adjustable rate mortgage vs. fixed rate mortgage and lump sum vs. line of credit. This is an area you absolutely cannot go into blind—you need to know what it is that you are looking for.
Upon researching these topics and getting an inclination as to which option you would like to choose, it may be incredibly beneficial to get multiple opinions from experts that look through your finances. Make sure you understand why each expert recommends an option to avoid an agency that is simply trying to scam you out of the money that is rightfully yours.
In addition, read reviews of every agency or professional you go to beforehand. This will ensure you will know if the agency is trustworthy or not, and will help you catch any tricks or scams someone may be trying to pull on you.
Perhaps the most important thing you can do is to go to a multitude of different places to get quotes on your house as well as the interest rates they offer. Some agencies may offer you considerably more money for your equity than others, but a good starting point to gauge offers on is less than 50% of the equity of your house.
Interest rates are not the only charges an agency will have on you, though. Agencies will charge many other fees, the most common of which is servicing fee. When figuring out how much money you will end up with, be sure to take into account both fees and interest as well as the amount of money you will receive. All of the pieces fit together delicately and will help you understand the big picture.
Lastly, a common trick that is often pulled on unsuspecting seniors is including a long-term annuity in the investment strategy that will not allow you to access your funds for a given period of time. These have steep penalties with them and are more or less designed to cheat you out of your money. If a consultant seems too eager to help you invest your proceeds, a red light should go off.
It is impossible to create blanket advice that is right for everyone in every financial situation. For this reason, you need to go to consultants that can evaluate your needs and examine your unique situation.
Ask about the upsides and downsides of everything they offer, and be wary of those who claim no downsides to a particular plan. If it sounds too good to be true, it probably is. Only proper research and time spent comparing offers will properly prepare you.