For years senior homeowners could tap into the equity of their homes with no income or credit qualifications by getting reverse mortgages. This is a financial instrument that functions similar to home equity lines of credit with the main difference being the homeowner didn’t have to make payments on the loan as long as they lived in the home full time. However, a person who wants to obtain a New Jersey reverse mortgage will now be subjected to new qualification requirements starting this year.
As noted before, there were no income or credit qualifications required to obtain a reverse mortgage. The only requirements were the person (or persons) had to meet the minimum age requirement and live in the home permanently. Unfortunately, a growing number of these homeowners fail to pay their property taxes and home insurance, which sometimes lead to homes being seized by the government.
This issue has led to the passing of a law requiring banks to verify applicants have the ability to pay for the insurance and taxes as well as a history of paying their financial obligations. In short, people must now have a good credit history to qualify for reverse mortgages. Additionally, FHA has reduced the loan amount homeowners can obtain through reverse mortgages.
The cumulative effect of these changes may be that fewer seniors are able to obtain reverse mortgages. One of the purposes of a reverse mortgage is to help the senior homeowner remain in his or her home. Often, the reverse mortgage eliminates the monthly mortgage payment, which can be beneficial for people living on fixed budgets. Without access to this tool, more seniors may be forced out of their homes and into the homes of adult children or senior care facilities.
For people who do qualify for reverse mortgages, however, this can be an excellent way to obtain cash for living expenses, pay debts, or to invest. It’s essential, though, to take the aforementioned changes into consideration when applying for a New Jersey reverse mortgage. To find out if a reverse mortgage is possible for you, contact a reputable mortgage company for more information and assistance. Contact Investors Home Mortgage for more information.