Montana Reverse Mortgage Guide

Are you a Montana resident nearing retirement or already enjoying your golden years? If so, you may have heard about reverse mortgages and wondered if they could be a viable financial option for you.

In this Montana Reverse Mortgage guide, we will walk you through everything you need to know about reverse mortgages in Big Sky Country. From understanding the basics to exploring the benefits and potential drawbacks, we’ve got you covered.

So, let’s dive in and explore this financial tool that can help you make the most of your retirement years.

What is a Reverse Mortgage?

A reverse mortgage is a unique type of loan available to homeowners who are at least 62 years old.

When you take out a reverse mortgage loan, the lender gives you access to funds based on the equity you have built up in your home without requiring monthly mortgage payments, which can help to free up additional cash.

Reverse mortgage funds are used to pay off the current mortgage, if the homeowners still have one. The remaining funds can be received as a lump sum, a line of credit, monthly installments, or a combination of the three.

A reverse mortgage isn’t repaid until you move out of the home, sell it, or pass away. At that point, the loan is typically repaid from the proceeds of the sale of the home.

Homeowners are still required to pay the property taxes, the homeowner’s insurance, maintain the home, and pay any other required fees such as homeowners association fee.

Benefits of a Reverse Mortgage

A reverse mortgage can offer many benefits to those in retirement including the following.

Supplement Retirement Income

One of the primary benefits of a reverse mortgage is that it provides a source of income during your retirement years. Whether you need the funds to cover daily expenses, medical bills, or you simply want to enjoy your retirement with greater peace of mind, a reverse mortgage can help increase cash flow and supplement your income.

Stay in Your Home

Another advantage of a reverse mortgage is that it allows you to stay in your home while accessing the equity you have built up over the years. This can be particularly beneficial for those that want to retire in the community where they have and wish to age in place. With a reverse mortgage, you retain ownership of your home as long as you meet the required obligations, such as paying property taxes and homeowner’s insurance.

Flexibility and Control

Reverse mortgages offer flexibility in how you receive your payments. Whether you prefer a lump sum, a line of credit, or monthly installments, you have the freedom to choose the option that best suits your needs. Additionally, you have control over how you use the funds, whether it’s for home improvements, travel, or any other purpose that enhances your retirement lifestyle — there are no rules about how the funds from a reverse mortgage can or can’t be used.

What Kinds of Reverse Mortgages Can You Get in Montana?

These are the reverse mortgage programs available to qualifying Montana residents:

Home Equity Conversion Mortgage (HECM)

This is the most common type of reverse mortgage offered in Montana. It is backed by the Federal Housing Administration (FHA) and regulated by the U.S. Department of Housing and Urban Development (HUD). It is available to borrowers aged 62 and older with no restrictions on how the funds are used. HECM reverse mortgages have a lending limit is set by the FHA, which is currently $1,149,825 for 2024.

Single-Purpose Reverse Mortgage

This is the least common type of reverse mortgage, also known as property tax deferral programs and deferred payment loans. They are only available to senior homeowners aged 62 and older and can only be used for a specific purpose approved by the lender, typically home improvement projects.

Jumbo Reverse Mortgage

This is a proprietary reverse mortgage that allows homeowners to borrow more than the FHA lending limit of $1,089,300. These reverse mortgages are not backed by the FHA and come with higher interest rates but do not require mortgage insurance premiums.

HECM for Purchase

A Home Equity Conversion Mortgage for Purchase, also known as HECM for purchase, is a unique financial tool that allows homeowners to finance part of their new home with a reverse mortgage. This is done in combination with a large down payment from the sale of a previous home, allowing older homeowners to upsize or downsize in retirement without taking on monthly payments.

Reverse Annuity Mortgage (RAM) Program

Montana offers its Reverse annuity Mortgage Loans to homeowners who are at least 68 years old. This program requires that the annual family income is below a certain limit depending on how many people live in the household. For a one person household, the income cannot be above $29,160 per year. The maximum amount that Montana homeowners can borrow though this program is $150,000.

Montana Reverse Mortgage Requirements

If you are looking to apply for a reverse mortgage in Montana, it’s important to know that there are a number of requirements you must meet in order to qualify including the following:

At least one homeowner must be at least 62 years old.
The home must be the primary residence of the homeowners.
Homeowners need to have equity in their home.
The home must be in good condition.
The homeowners must be able to continue to pay the property taxes, homeowner’s insurance, HOA fees (if applicable), and maintain the home.
The property must be eligible for a reverse mortgage, which includes being a single-family home, a two-to-four-unit property with the homeowners occupying one unit, an FHA-approved condominium, or an approved manufactured home.
Prospective borrowers must complete a counseling session with a HUD-approved third-party counseling service.

Montana Reverse Mortgage Borrower Rights

In contrast to some states that have implemented additional laws and regulations to govern the operations of reverse mortgages, Montana does not have such provisions in place.

However, Montana reverse mortgage borrowers are still afforded certain protections as outlined by the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA). These protections include:

Counseling

All individuals seeking a reverse mortgage must undergo a counseling session with a third-party HUD approved counselor. This session aims to educate borrowers about the intricacies of reverse mortgages, assess whether it is suitable for their specific circumstances, explore alternative options such as a home equity loan or HELOC, and ensure that they are not being unduly influenced by someone with a financial interest in the loan.

Right to Rescission/Right to Cancel

Reverse mortgage applicants retain the right to cancel their loan application at any time, including within three business days after signing the closing loan documents.

Montana Reverse Mortgage Calculator

If you are contemplating a reverse mortgage loan and would like to determine your potential loan amount, we invite you to use our Reverse Mortgage Calculator.

It is important to note that the number generated by this calculator is solely an estimate. For more precise information, we highly recommend consulting with a reverse mortgage loan officer.

The Montana Reverse Mortgage Loan Application Process

The reverse mortgage application process is a thorough and deliberate procedure that requires careful consideration. It is important to note that this process may take up to 45 days to complete, so it is advisable not to delay initiating the application process if you are seriously considering a reverse mortgage.

At Mutual of Omaha Mortgage, we understand the importance of transparency and efficiency in the reverse mortgage application process. Our dedicated team is committed to guiding you every step of the way, ensuring a seamless experience as you explore the benefits of a reverse mortgage.

If you choose to apply for a reverse mortgage with Mutual of Omaha Mortgage, here is an overview of what you can expect:

Step 1: Consultation with a Reverse Mortgage Loan Officer

The first step involves meeting with one of our experienced reverse mortgage loan advisors who is licensed in Montana. They will assess your unique situation, provide an estimate of potential benefits, go over the various reverse mortgage options, and address any questions or concerns you may have. Step

Step 2: Counseling Session

After your initial consultation, you will undergo a counseling session with a HUD-approved third-party counselor. This session aims to educate you about the features and suitability of a reverse mortgage, as well as other financial options available to you. Upon completion, you will receive a certificate that needs to be presented to your advisor before officially filing the reverse mortgage application. This step ensures that you have all the necessary information to make an informed decision.

Step 3: Submit Application

Once you have obtained the counseling certificate, your reverse mortgage loan advisor will assist you in submitting the application and gathering the required documentation. This typically includes providing a photo ID, homeowner’s insurance policy, and property tax bill. By promptly gathering these documents, we can expedite the loan closure process.

Step 4: Appraisal and Information Gathering

Upon submission of your application, Mutual of Omaha Mortgage will order a home appraisal to assess the condition and market value of your property. This appraisal helps determine the eligible loan amount. Additionally, we will obtain a title and credit report to check for any liens and evaluate your financial health. This comprehensive process usually takes one to two weeks to complete.

Step 5: Processing and Underwriting

Once your application and documentation have been submitted, our team will initiate the manual underwriting process. During this stage, the underwriter verifies that all reverse mortgage requirements are met and determines whether the loan is approved. In some cases, additional documentation or home repairs may be requested before finalizing the loan. Your reverse mortgage loan advisor will keep you informed about any necessary actions.

Step 6: Closing

Upon approval of your application, a closing date will be scheduled. You will have the option to sign the closing documents either at home with the assistance of a mobile notary service or in person at the title company.

Step 7: Disburse Funds

Following the signing of the closing documents, there is a mandatory three-business-day waiting period before the funds are disbursed. The disbursement method(s) selected during the application process will determine how the funds are received.

Find a Montana Reverse Mortgage Loan Office in Your Area

Mutual of Omaha Mortgage is a licensed Reverse Mortgage lender in the state of Montana. You can get started by calling 800-578-0283 or filling out this form here.

You can also find Montana Reverse Mortgage loan officers in your area through our loan officer directory or by clicking on one of the links below to find a loan officer near you:

Reverse mortgage borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.

This information is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.

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