A reserve mortgage is a program that allows you to tap into the equity of your home while still living in your home. Reverse mortgage programs are specifically designed for individuals who are of retirement age. Before entering into a reverse mortgage, you need to make sure you fully understand how the program works. 

The Reverse Mortgage Amount Depends on Three Primary Factors

The amount of the reverse mortgage that you qualify for depends up a couple of factors.

Age

First, they will factor in the age of the youngest spouse. So if you are 70, and your spouse is 63, they will use your spouse's age, 63, in their calculations. The more advanced you are in age, the more equity you will be able to tap into.

Appraised Value of Home

Second, they are going to look at the appraised value of your home. That is the estimated value of your home if you were to sell it on the marketplace today.

Equity in Home

Third, they look at the amount of equity you have built up in your home and the debt you carry on your home. If you still owe money on the home, you will first have to use the reverse mortgage to pay off your home, reducing the money you are able to use from the reverse mortgage.  

From there, they will offer you a reverse mortgage for a set percentage of your home, usually up to 70%.

You Retain Ownership of Your Home

You retain the ownership to your home when you take out a reverse mortgage. You are not giving your home up to the bank. You still fully own your home, and you are able to choose to keep your home or sell your home.

If you decide to sell your home, you are going to have to pay back your reverse mortgage when you sell the home.

You Maintain Responsibility for Property Taxes & Insurance

Your reserve mortgage gives you access to a line of credit that you can use to sustain your lifestyle while continuing to live in your home. The debt will be settled when you sell your home.

However, that doesn't mean all your home expenses disappear. You still must pay your property taxes each year and you must maintain insurance on your home.

A reserve mortgage is a tool that allows you to enjoy the equity your build-up in your home, while still living in your home. It is important to remember that you are still responsible for maintaining home insurance on your home as well as your property taxes, and when you sell your home, or your estate sells your home, you must pay back the reverse mortgage.