Tenafly is one of the neighborhoods in Bergen County where home values are high, and it is common to see families approaching retirement who own homes but feel cash-strapped. One option to consider when wanting to reduce the burden of property taxes while not wanting to leave their current home is a reverse mortgage. When exploring this option, there are three main things to check in order:

• Product Structure - Whether the structure allows homeowners aged 62 and older to receive funds as a lump sum, monthly payments, or a line of credit, using their home equity as collateral, and whether repayment occurs when the home is sold, the owner passes away, or the home is no longer used as the primary residence.
• Local Conditions - Considering the home values in Tenafly and the property tax rates in Bergen County, whether there is financial capacity to continue paying property taxes and insurance premiums each month.
• Costs and Risks - Whether the initial costs, such as origination fees and mortgage insurance premiums, and the rate at which equity decreases and the risk of default have been assessed.

The most commonly used product is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA) and is the only type of reverse mortgage backed by the U.S. federal government. The application requirements include being 62 years or older, the home being the primary residence, having an existing mortgage balance that can be paid off with the loan amount, and passing a financial assessment to ensure the ability to continue paying taxes and insurance premiums (according to hud.gov).

In Tenafly, the Zillow estimated home value is $896,668, which has increased by 10.4% over the past year (as of 2025, Zillow). While the high home value allows for a significant amount of equity to be accessed, it does not eliminate the burden of property taxes. The effective property tax rate in Bergen County is around 2.73% (according to Ownwell), which is higher than the New Jersey state average of 2.23%, making it important to note that even after securing cash flow through a reverse mortgage, the homeowner will still be responsible for property taxes and insurance premiums.

The second thing to check is the costs. The initial costs tend to be higher than a standard mortgage due to origination fees, mortgage insurance premiums (MIP, initially around 2% with an additional annual rate of 0.5%), and closing costs (according to consumerfinance.gov). The third consideration is the decrease in equity over time. Since the loan balance increases each year, the remaining equity in the home decreases, which can reduce the assets passed on to children. If property taxes, insurance premiums, and maintenance costs cannot be paid, there is a risk of default and losing the home, which is the most serious concern among the three items.

However, there are clear advantages as well. The structure allows for no monthly principal and interest payments, providing cash flow for living expenses or medical costs, and HECM is a non-recourse loan, meaning that if the home value falls short of the loan balance in the future, heirs are not required to pay the difference due to FHA insurance. This advantage should be considered after thoroughly reviewing the three previously mentioned items.

In New Jersey, the population aged 65 and older makes up about 18% of the total, having increased by 33% since 2010 (as of 2024, USAFacts). In neighborhoods like Tenafly, where home values are high, it is expected that more families will continue to consider this option. HECM requires a mandatory counseling session with a HUD-approved counselor before applying, and this session can serve as an opportunity to review the three check items once again. Since scams related to reverse mortgages targeting the elderly do exist, it is advisable not to rush and to discuss thoroughly with family before making a decision. This article is not investment or legal advice, and it is recommended to consult with a professional before entering into any contracts.