Reverse home mortgages are complicated and not for everybody.
They are designed for seniors - 62 or older - to borrow against their home's equity. But where there is money, there are scammers.
With a regular mortgage, homeowners make monthly payments to a lender. In a reverse mortgage, a lender pays the homeowner.
The loan is repaid when the homeowner passes away, sells their home or when the home is no longer their primary residence.
That means if someone decides to sell the family home, they are not going to get as much.
"If you have a reverse mortgage on your house, and you've had it for several years. the more money you get, the more money you're going to owe on your house the less money you're going to get when you sell it," said Aaron Reese with the Better Business Bureau.
Reverse home mortgages aren't for everybody, but they do have their benefits.
"It is a really great vehicle for seniors who choose to age in place. And they don't want to out-live their money, so they'll have a little extra money available," said Victoria Duke, a professor of Law and reverse mortgage expert.
The federal government highly recommends talking to a counselor who can walk someone through the process and help them decide if it's best for them.
If the lender doesn't offer that, that is a red flag. Another red flag is who to make the check out to.
"He said, 'you are going to have to pay us $800 for three months. can you afford that?' I said, 'I guess so,'" one mortgage scam victim said.
Just last year, a metro man was charged with ripping off a 70-year-old Excelsior Springs woman in a reverse mortgage scam.
The Housing of Urban Development says Robert Todd convinced her to write the checks to him instead of the bank.
"Oh, I was mad, really upset," the victim said.
Luckily, she got her money back once Todd was charged.
"If you're looking to get a reverse mortgage, you're going to want to get some outside advice. Talk to a financial adviser or someone you know and trust that is good with finances and might know what is your best option," Reese said.
Scammers love using reverse home mortgages because they think senior citizens are easy targets.
Read more: http://www.kctv5.com/story/29056290/cautionary-tales-reverse-mortgages-could-lead-to-problems
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