Securing a Montana Reverse Mortgage

You can find a Montana reverse mortgage without any trouble at all if you’re a senior over the age of 62 and you own a home.  You’ll need to prove that you have some equity built up in the home, enough to cancel out any other debts on the property.  If this describes your financial situation, a reverse mortgage may be an excellent option for you to pursue.  You can use this loan type to access the money you need to retire securely.

What is a reverse mortgage?

In a reverse mortgage, the lender pays equity out of your home to you in the form of cash, instead of the other way around. The amount of money you’re able to receive through your reverse mortgage is entirely dependent on how much equity you have in your home when you take out the loan. Most seniors over the age of 62 who own homes will qualify for reverse mortgages in Montana without any problems.

How can reverse mortgage funds be used?

The money you receive through this reverse mortgages belongs to you unequivocally and may be spent on anything you wish to spend it on.  Many seniors choose to use this money to pay for retirement expenses such as medical bills, property taxes, vacations, and other costs.

What types of reverse mortgages exist?

Reverse mortgages have three forms:

• Goverment-insured: FHA HECM (Home Equity Conversion Mortgage).
• Single-purpose: backed by nonprofits or state or local government agencies. 
• Proprietary: backed by private entities.

The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.

Who can get a reverse mortgage?

Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor. 

What costs are associated with a reverse mortgage?

There are several costs associated with securing an HECM reverse mortgage in Montana, including but not limited to:

• Upfront fees: include the lender's fees, and can be paid from the reverse mortgage funds. This means, however, that the money taken cannot be borrowed back. So a $200,000 reverse mortgage with $16,000 in fees paid via the reverse mortgage funds will leave the homeowner with $184,000. 
• Closing fees: include all the same fees required of a traditional mortgage closing. 
• Reverse mortgage counseling fees: HUD mandates all reverse mortgage homeowners attend reverse mortgage counseling. Fees are in the $100 range but can be waived for lower income seniors. 
• Mortgage insurance: an upfront mortgage insurance premium (MIP) must be paid for reverse mortgage borrowers. It can be as low as 0.5% and as high as 2.5% of the appraised home value, unless the home is over $625,500, in which case the upfront mortgage insurance is calculated by the lender. 

How will I receive my funds, and for how long?

In this type of loan, your lender becomes the owner of the equity in your home and provides you an equivalent amount of money, minus fees, in return.  This money can be provided in any of several ways.

• You can choose to receive it as a lump sum at the close of the loan.
• You can receive a specified portion of the money each month until you have no more equity left.
• You can spend the money through a credit line, much like a home equity line.

If none of these options seems fitting for your financial situation, you can choose to customize your own equity payout arrangement with your lender. Funds will be given until equity runs out. 

Does the equity need to be repaid?

Your home will always belong to you unless you move or decide to sell it. Only then will equity become due. When you pass away, the obligation of paying back the reverse mortgage will transfer to whoever inherits the home. Your heir or heirs can simply sell the home and give the money to your lender to pay back the loan.

Montana Reverse Mortgage Lenders

Before you decide to pursue a reverse mortgage, find a lender who can service your loan affordably.  Reverse mortgages often come with high fees attached.  Do as much research as possible to find the lender who offers the lowest mortgage rates and the lowest fees.  This will allow you to take advantage of as much of your home equity as you can.

For more information on finding the best mortgage rates and applying for a reverse mortgage, read through our reverse mortgage checklist.

Montana Senior Resources

Montana is very friendly to retirees and offers its own state sponsored reverse mortgage program, the Reverse Annuity Mortgage. This program offers seniors more independence and income while they continue to live in their homes. There are no location restrictions so the program is available in Billings, Helena, Bozeman and beyond.

Lenders in: Montana.