Finance
A NJ reverse mortgage (HECM) allows eligible homeowners to:
APurchase a new home with no down payment
BConvert home equity into loan proceeds without monthly mortgage payments, with the loan repaid when the home is sold or the borrower moves out✓ Correct
CTransfer their mortgage to a family member
DRefinance with a lower interest rate automatically
Explanation
A Home Equity Conversion Mortgage (HECM) reverse mortgage allows homeowners aged 62+ in NJ to draw on their home equity as a lump sum, monthly payments, or line of credit. No monthly payments are required; the loan becomes due when the last borrower sells, moves, or dies.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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