NJ Home Mortgage: What is a Reverse Mortgage?

There are many NJ home mortgage options available and a reverse mortgage is an option available to seniors 62 years of age or older looking for money to finance a home improvement, pay off their current mortgage, supplement their retirement income, or pay for healthcare expenses. In general, the reverse mortgage is a loan available to the aforementioned population, utilized to release the home equity in the property as either one lump sum or through multiple payments. The homeowner does not have to repay the loan until they die, the home is sold, or the owner leaves.

In a conventional NJ home mortgage, the homeowner makes a monthly payment to the lender. After each subsequent payment, the equity increases within their property, and at the end of the pre-determined term (i.e. 15 or 30 years), the NJ home mortgage is paid in full and the property is relinquished from the lender and becomes fully and solely owned by the homeowner. In the reverse mortgage option, the homeowner makes no mortgage payments and all interest is added to the lien on the property. If the owner elects to receive monthly payments or a bulk payment of the available equity percentage of their age – then the debt on the property increases per month.

NJ Home Mortgage Options: Who Qualifies For a Reverse Mortgage?

The borrower must be 62 years of age or older and must occupy the property as their principal residence. In addition, there are no minimum income or credit requirements because there are no payments required to be made on the mortgage. The proceeds of the reverse mortgage loan may be used in any way the borrower wishes and even nicer, are not subject to income tax. However, if the borrower is undergoing a current/pending bankruptcy, a court approval will be necessary prior to the closing of the loan. Finally, reverse mortgages follow the FHA standards for property types allowed. As a result, most one to four family dwellings, FHA approved condominiums and PUD’s will qualify.

** Before starting the reverse mortgage process, homeowners must take an FHA approved counseling class and present a certificate of completion. This counseling is meant to provide a sense of understanding. It is important that the homeowner is completely informed and feels comfortable with the unique perspective of this financial, NJ home mortgage endeavor. Furthermore, the maximum lending varies by county, but may not exceed $625,000.00. Ultimately, the loan size a homeowner qualifies for is based upon the borrower’s age, the value of the residence, and the home location.

NJ Home Mortgage: How is the Reverse Mortgage Amount Determined?

1. The appraised value of the property considering any need for repairs or any existing leans currently exist on the home.
2. The current interest rates (based on U.S. Treasury 1 year T-Bill, LIBOR index or 1 year CMT).
3. Age of the homeowner (The older the senior, the more money available).
4. Whether the payment is a line of credit, lump sum, or monthly payments.
5. Value of the property – is higher than the national loan limit set by HUD?