New Jersey Reverse Mortgage Information
A reverse mortgage allows homeowners, aged 62 or over, to use the equity in their homes to take out a loan. The home must be owned outright or have a small mortgage balance. The New Jersey Housing and Mortgage Finance Agency offers the loans.
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Features
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The reverse mortgage provides the homeowner with an income using the equity in the home. The loan amount is determined by the value of the property and the owner's age. The loan proceeds can be taken in a lump sum, monthly payments, a line of credit or a combination of these options. Counseling is mandatory.
Significance
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The Home Equity Conversion Mortgage (HECM), is an FHA-insured loan. The mortgage proceeds will not be due unless the home is no longer the principal residence, the owner does not live in the home for 12 consecutive months, is deceased or violates the covenants of the loan.
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Considerations
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Several fees are associated with an HECM loan. In addition to closing costs, other fees include an application fee, origination fee, mortgage insurance and a monthly servicing fee. Additionally, a fee is charged if the borrower wants to change the payment plan of the loan.
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References
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