Should You Get a Reverse Mortgage Instead of Selling? What Bergen County Homeowners Need to Know

Weighing a reverse mortgage against selling your Bergen County home? Here's what to know first.

If you've owned your home in New Jersey for twenty or thirty years, there's a good chance you're sitting on more equity than you ever expected when you bought the place. There's also a good chance you've seen the ads: turn your home equity into cash, eliminate monthly mortgage payments, and stay in the house you love. Reverse mortgages are often pitched as the solution for homeowners who are equity-rich but cash-poor.

That pitch isn't necessarily wrong, but it isn't the whole story either. And in New Jersey, one part of that story matters more than it does in many other states: your property taxes. A reverse mortgage may eliminate the requirement to make monthly principal-and-interest payments, but it does not eliminate your property taxes, homeowners insurance, maintenance, utilities, or other housing costs.

Before deciding whether to borrow against your home equity, there is another number worth knowing too: what would you actually walk away with if you sold the house today? In my opinion, homeowners should know both numbers before making a decision.

What a Reverse Mortgage Actually Does

The most common type of reverse mortgage is a Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration. HECMs are generally available to homeowners age 62 and older. Instead of making required monthly principal-and-interest payments to the lender, the homeowner can access a portion of the home's equity through a lump sum, line of credit, monthly payments, or a combination of those options.

You continue to own the home and remain on the title. The loan balance generally becomes due when you sell the home, permanently move out, or the last eligible borrower dies. For 2026, the FHA's nationwide HECM maximum claim amount is $1,249,125, but that does not mean someone with a $1.2 million home receives a $1.2 million check.

The amount available depends on several factors, including the age of the youngest borrower or eligible non-borrowing spouse, current interest rates, the home's appraised value, and any existing mortgage debt. If you already have a mortgage, that loan generally has to be paid off when the reverse mortgage closes, usually using part of the reverse-mortgage proceeds. That means the amount of cash actually available to you may be much lower than the headline number being advertised.

One important protection of an FHA-insured HECM is that it is a non-recourse loan. Generally, neither you nor your heirs will owe more than the value of the home when the loan becomes due, even if the balance eventually grows beyond the property's value.

That protection is valuable, but it is not free. Reverse mortgages can include an upfront FHA mortgage-insurance premium, ongoing mortgage-insurance costs, interest, an origination fee, appraisal and title charges, recording fees, and other closing expenses. Many of these costs are financed into the loan instead of paid in cash at closing, which makes them less noticeable upfront, but they are still costs. Because interest and certain fees accumulate over time, the loan balance generally grows instead of shrinking.

That is the basic trade-off. With a traditional mortgage, you spend years reducing debt and building equity. With a reverse mortgage, you gradually convert some of that equity back into debt.

The New Jersey Problem: Your Property Taxes Don't Go Away

This is the part I think deserves much more attention in New Jersey. A reverse mortgage does not eliminate your property taxes, homeowners insurance, utilities, repairs, maintenance, HOA fees, or condominium fees. You remain responsible for those expenses for as long as you own and occupy the home.

Keeping property taxes and homeowners insurance current is especially important with a reverse mortgage. If those obligations are not paid, the loan can eventually go into default. That matters a lot in New Jersey, where homeowners face some of the highest property-tax bills in the country.

Think about the homeowner who bought a house decades ago. The mortgage may be paid off, and the house may now be worth $700,000, $900,000, or more. On paper, that homeowner looks wealthy. But they may still be paying $15,000 or $20,000 a year in property taxes, plus insurance, utilities, landscaping, roof repairs, heating-system repairs, and everything else that comes with maintaining an older home.

That is how someone can be house rich and cash poor.

A reverse mortgage may improve cash flow, but it does not necessarily fix the underlying problem if the real problem is that the house itself has become too expensive to carry. New Jersey also offers property-tax relief programs, including Senior Freeze, Stay NJ, and ANCHOR, and anyone considering a reverse mortgage should look into those programs separately because reducing the tax burden may change the entire calculation.

Reverse Mortgage or Sell?

Neither option is automatically better. A reverse mortgage can make sense for the right homeowner. If you are 75, love your home, have no intention of moving, have substantial equity, and can comfortably afford your taxes, insurance, maintenance, and other carrying costs, a reverse mortgage may be a legitimate way to remain in the home while accessing some of your equity.

But consider a different situation. Maybe the house is starting to feel like too much. You are tired of the property-tax bill. You barely use the second floor. The yard has become work. The furnace is getting old, the roof is not far behind, and your children moved out years ago. Maybe you have already talked about moving to Florida, the Carolinas, Pennsylvania, a condo, a 55+ community, or simply something smaller.

In that situation, taking out a reverse mortgage deserves a much closer look. If there is a reasonable chance you are going to sell within the next several years anyway, you may be adding interest and loan costs to an asset you already plan to liquidate.

Selling is not free either. There can be brokerage compensation, New Jersey transfer fees, attorney expenses, moving expenses, and other closing costs. You also have to decide where you are going next. But depending on the move, you may reduce your property taxes, insurance, utilities, maintenance, and future repair costs while converting more of your home equity into usable cash.

That is why I do not think the real question is simply, "Should I get a reverse mortgage or sell my house?" The better question is, "What does staying in this house cost me over the next five or ten years compared with my realistic alternatives?"

That is the comparison I would want to see before making a decision.

Questions to Ask Before Signing Anything

Before putting a reverse mortgage against decades of accumulated equity, I would want clear answers to a few important questions. What will the loan balance look like in 5, 10, 15, and 20 years? How much cash will actually be available after paying off any existing mortgage and closing costs? Can I comfortably continue paying the property taxes, homeowners insurance, maintenance, and HOA fees? If my spouse is not a borrower, will they qualify as an eligible non-borrowing spouse, and what protections would they have if I die first?

I would also ask what happens to my children or other heirs. When the last borrower dies or permanently leaves the home, the loan generally becomes due. Heirs may have options, including selling the property or arranging financing if they want to keep it, but they should contact the loan servicer promptly rather than assume they have unlimited time.

It is also worth asking whether a HELOC or traditional home-equity loan could accomplish the same goal at a lower cost. Those loans generally require monthly payments and different qualification standards, but they are still worth comparing.

And then there is one question a reverse-mortgage lender cannot fully answer for you: how would selling change your monthly expenses and overall financial picture?

Before You Decide, Know What Your House Would Actually Sell For

This is the part that surprises me about the whole process. Someone considering a reverse mortgage may spend hours talking with a lender about exactly how much money the loan could provide, but they may have no idea what their house would actually sell for.

That is only half the equation.

Before borrowing against your home's equity, I would want to know both numbers: what would a reverse mortgage actually provide, and what would I realistically walk away with if I sold the house today?

The first number comes from a reverse-mortgage professional. I can help you determine the second one.

I can prepare a confidential, no-obligation market analysis for homeowners in Bergen County and throughout North Jersey, showing what your property would realistically be worth in today's market and what a potential sale might look like after normal selling expenses.

That does not mean you have to sell. It does not mean I am going to pressure you to list your home. You may look at the numbers and decide that staying exactly where you are makes the most sense.

The point is simply to make the decision with both sides of the equation in front of you. For someone who has owned a New Jersey home for twenty or thirty years, the difference can be hundreds of thousands of dollars.

And that is worth knowing before signing anything.

Frequently Asked Questions

Do you still have to pay property taxes with a reverse mortgage in New Jersey? Yes. A reverse mortgage does not eliminate property taxes. Homeowners remain responsible for property taxes, homeowners insurance, maintenance, and other required property charges. Falling behind on required obligations can put the reverse mortgage into default.

Can a reverse mortgage pay off my existing mortgage? Yes. An existing mortgage generally must be satisfied when an FHA-insured HECM closes, and reverse-mortgage proceeds are commonly used to pay it off. That reduces the amount of cash or credit remaining available to the homeowner.

What happens to a reverse mortgage when you die? The loan generally becomes due after the last eligible borrower dies or permanently leaves the home. Heirs may have options, including selling the property or satisfying the reverse-mortgage balance if they want to keep the home. HECMs are non-recourse loans, meaning heirs generally do not owe more than the home's value under FHA rules.

Can you sell a house after getting a reverse mortgage? Yes. You still own the home and can sell it. The reverse-mortgage balance is paid from the sale proceeds, and any remaining equity belongs to you.

Is a reverse mortgage a good idea for seniors? It depends on the homeowner's goals and finances. It may work well for someone committed to staying in the home long-term who can comfortably afford property taxes, insurance, maintenance, and other costs. It may be less attractive for someone already considering moving or struggling with the ongoing cost of the home.

What's the difference between a reverse mortgage and a HELOC? A HELOC generally requires monthly payments and qualification based on factors such as income, credit, and equity. A HECM does not require regular principal-and-interest payments while the borrower meets the loan requirements, but the balance generally grows over time and the upfront costs can be higher.

Didn't reverse mortgages cause a lot of foreclosures in the past? There have been periods when reverse-mortgage foreclosures increased, particularly involving borrowers who became delinquent on property taxes or insurance under older loan standards. HUD later tightened financial-assessment requirements so lenders evaluate whether borrowers are reasonably capable of meeting their ongoing property obligations. The history reinforces one of the biggest points in this article: the mortgage payment is not the only cost that determines whether someone can afford to remain in their home.