Home Scam/Fraud What are reverse mortgage scams?

What are reverse mortgage scams?


Reverse mortgages can be helpful for older homeowners who have significant equity in their homes and want to convert it into supplemental income. However, bad actors sometimes target seniors with misleading claims about how a reverse mortgage works. Before you take out this type of loan, here’s what you need to know, including some of the most common reverse mortgage scams to avoid.

a person holding a cell phone: Couple looking at rates on phone

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Couple looking at rates on phone

How reverse mortgages work

Unlike a mortgage where you take out a loan and gradually pay it back, a reverse mortgage – as the name implies – works in the opposite way. Your mortgage lender makes loan payments to you, based on a percentage of the value of your home, either in a lump sum, monthly installments or a line of credit (or a combination of these options). Instead of paying down a loan, your debt grows, and you don’t pay it back until you sell or move out of your home,…

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