Reverse Mortgages: Potential Income for Older Americans
Reverse mortgages have become very popular in recent years as a source of income for older Americans. A reverse mortgage is a loan secured by home equity that doesn't need to be repaid until the end of the loan term, which is usually when the homeowner no longer occupies the home as a principal residence, sells the home, or dies.
If you obtain a reverse mortgage, you remain responsible for maintenance, insurance and taxes for the home during the loan period. You can use the money from the reverse mortgage however you choose. You cannot be forced to sell or vacate the home if the money received from the loan exceeds the value of the home. In addition, should you die and your spouse is a co-borrower, he or she cannot be forced to sell the house as long as he or she occupies the home as a principal residence.
When the borrower (and any co-borrower) leaves the home permanently, the loan balance plus accrued interest becomes due and payable. Your heirs may repay the loan and keep the home, or sell the home, repay the loan and keep the balance. If the loan exceeds the property value, your heirs will owe no more than the property value, and no additional financial claims can be made against them or the estate.
The MBOH Reverse Annuity Mortgage (RAM) Program
The MBOH Reverse Annuity Mortgage program was implemented by the Board in October of 1990. The program enables senior Montana homeowners to more substantially provide for their own in-home support. Lower income seniors have the ability to use the equity in their homes and benefit from the additional income.
To qualify for a reverse mortgage, you and any co-borrower must be at least 68 years old, must own your home free and clear (or have a very low outstanding debt), and must occupy the home as your principal residence.
Here are the income limits for a MBOH Reverse Annuity Mortgage:
1 Person Household $23,760
2 Person Household $32,040
3 Person Household $40,320
The application process includes a requirement that potential borrowers complete a session with a RAM counselor. The RAM application may be completed during the counseling session. RAM counselors are part of the Montana Aging Services Network. If you decide to proceed with the application process after your counseling session, your completed application is submitted to the MBOH.
Once you qualify and your loan closes, you will receive a monthly payment on the first of each month from the MBOH for 10 years. Your loan amount can be up to 80% of the FHA appraised value of your home. We offer loans of up to $150,000, and not less than $15,000.