As we age, things change and that includes our finances. For our more mature population, those 62 and older, they see themselves in a difficult situation when finances just aren’t what they used to be. Older Americans should be enjoying their retirement and not worry about losing their homes. That is one of the reasons why the U.S. Department of Housing and Urban Development (HUD) created reverse mortgages. It allows qualified individuals to draw on the equity of the home without making monthly payments while living in the home. Sounds simple enough but you need to have as much information as possible before making the decision to obtain a New Jersey reverse mortgage.
The Features
The biggest reasons that homeowners choose a New Jersey reverse mortgage are the features. These include:
- Keeping the title and ownership of the home
- No monthly payments made to the mortgage lender. Instead, in some cases, the homeowner receives a payment each month
- Any money obtained from a reverse mortgage is not subject to personal income taxation
- Both income and credit are considered when applying for a reverse mortgage
- It is not a grant but a loan that will be repaid in the future
- Can only be used on your primary residence
These all sound like great features for many homeowners but this does not benefit every situation. If, for example, you or your loved one currently do not have a mortgage payment then a New Jersey reverse mortgage is not right for you. Moreso, if you fear that the home will be a burden to the surviving family upon your passing, a reverse mortgage is not the way to go since repayment would need to be made.
The Steps
Trust is paramount when seeking a reverse mortgage. Oftentimes, the elderly are our most vulnerable population and are taken advantage of. It is important to work with a mortgage company that has a proven track record of successful reverse mortgages and it is always a good idea to have a New Jersey real estate attorney guiding you through the process. There are several steps that go into obtaining a reverse mortgage. The steps go as follows:
- Counseling: This is a stringent requirement and must be completed by an unbiased 3rd party, HUD-approved agency
- Application: The next step is to set up a time to go over your loan application and disclosures in detail with your reverse mortgage specialist.
- Processing: The loan is then reviewed and the property is inspected to ensure there are no outstanding issues that can pose a risk to the lender.
- Underwriting: This is where your appraisal will be ordered, the title is ordered, and other information for underwriting.
- Closing and Disbursement: It is time to sign the documents and seal your fate. Upon signing there is a three-day period where you can cancel. After the three-day waiting period, your loan will be finalized.
Is a New Jersey Reverse Mortgage Right For You?
A reverse mortgage is a big decision and is not for everyone. Speak to a real estate attorney from the Law Offices of James C. DeZao, P.A. We will review your situation and help you determine if a reverse mortgage is the right option for you. Call our office at (973) 358-6134 to schedule a consultation today.