Reverse Mortgages Another Option for Senior Homeowners

Buy a motor home and travel the country. Pay for grandson Johnny's college education. Fix up that old kitchen you've been complaining about for decades. These are things you've been wanting to do for years and years, but, though you've worked hard all your life, there never seemed to be enough "extra" to make it all happen.

The reverse mortgage—which came into prominence in the mid-1990s when the Federal Housing Administration (FHA) began to insure such loans—is a loan available to people 62 years and older who want to use the equity in their primary residence, whether that's a single-family house, townhome, or a condo, to access cash. Many people in this age bracket might think that the only way to use the equity from their house is to sell it, but that's not necessarily so. This newer loan structure, sometimes called a home equity conversion mortgage (HECM), is becoming more widely used by condo and townhome owners, and has even recently become available to some co-op owners outside of New Jersey.

Tapping Your Equity

"[A reverse mortgage] is a way to use equity in your house, to stay in your house, and do whatever it is you choose to do with money," says Carol Ramer, a reverse mortgage specialist for Financial Freedom Senior Funding Corp.

According to Jennifer Monaghan, a spokesperson for the New Jersey Housing and Mortgage Finance Agency (HMFA) of the New Jersey Department of Community Affairs, the reverse mortgage "allows homeowners to tap into the equity of their existing homes without having to make monthly mortgage loan payments. The loans can be paid back at any time, but usually are paid when the house is sold either by the owner or the owner's estate."

Given the rising values of homes in New Jersey the idea of a reverse mortgage should be of particular interest to seniors, who are now sitting on an even bigger goldmine than they might have thought. The amount that a borrower is able to receive is based on a formula that looks at a borrower's age, the interest rate and the equity in the home. The more equity you have in your home, the more money you can get out of it.


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  • We must be first HOA turned down. We qualify, house paid up, appraised at $450,000 but development 3 years old, more phases to be built and reserve fundneeds to be built up again. Beautiful development, prime location in Palm Desert Ca. How can we make this happen