To qualify for a reverse mortgage, you must meet the following requirements.

• Be at least 60 years old. This is two years younger than the typical federal requirement of 62 years of age;
• The home is used as a primary residence;
• Maintain homeowner’s insurance;
• Maintain current on property taxes;
• Meet FHA minimum property standards;
• Own the home outright or possess majority equity;
• No delinquent federal debt, like income taxes or federal student loans.

In New Jersey, there are no other income, credit, or additional requirements to qualify for a reverse mortgage.

New Jersey homeowners will pay similar costs as a conventional mortgage when they take out a home equity loan. They include the following.

• HECM Counseling Fee: This is unique to a home equity loan. You must pay the fee and attend the session before the application process.
• Origination Fee: You pay a fee to originate the loan. It cannot exceed $6,000.
• Closing Costs: The closing costs can include property appraisals, real estate taxes, title searches, surveys, and more.
• Mortgage Insurance Premium: HECM loans require you to carry FHA mortgage insurance. You pay a cost up front and then an annual fee, which can be rolled into the life of your loan.
• Interest: Your interest rates can be variable or fixed, as outlined in your loan terms.

District Lending can help you understand the costs upfront so there are no unexpected expenses during closing.

A HECM loan may impact your heirs after your death or if you sell the property while living. The loan balance must be settled within 30 days unless you consult with an attorney or HUD counselor. They may be able to extend it up to six months.

The Consumer Financial Protection Bureau outlines that heirs must repay the loan balance or 95 percent of the home’s appraised value, whichever is less. The loan can be repaid from any remaining equity in the house. If there is leftover equity, it will be distributed to your heirs.

If the home’s equity cannot cover the cost of the loan, your heirs can sell it to cover the cost or settle it another way. Any remaining equity after the sale will be given to your heirs.

Reverse mortgages must be repaid if the home is sold, is no longer your primary residence, or fails to meet the minimum requirements of the loan. The minimum property expectations are outlined in the terms of your loan. 

If you do not meet them, you could be required to pay your loan in full prematurely, and you could lose your home.

Reverse mortgages carry many of the same risks as any home loan. You could lose your home if you do not meet its requirements. If you have a family member living with you, they may be unable to keep the house if they cannot resolve it.

District Lending will work with you through the loan application process to understand the risks for New Jersey homeowners and do our best to help mitigate them.