Americans are currently in the process of revising their concept of retirement. People now accept responsibility for planning for their own future by setting up their own retirement accounts, putting off their golden years because of limited cash resources and tapping into alternative sources to finance their dreams. That is why reverse mortgage loans are growing in popularity.
So, what is a reverse mortgage? Reverse mortgages are simply a type of home loan that allows those over the age of 62 to borrow against the equity in their home. The borrowers must continue to live in their home, but in return, they can get either get a lump sum payment, decide to use the reverse mortgage buffer as a line of credit or opt for monthly installments.
Although “reverse mortgage” is the current buzzword in the industry, they are not new to the financial landscape. The first documented reverse mortgage loan was secured by Nellie Young. The young woman made the arrangement in 1961 thanks to the Maine-based Deering Savings & Loan.
Reverse mortgage arrangements were far and few between until the Federal Housing Administration Insurance Program was signed into law in 1988. The American Association of Retired Persons (AARP), an organization tasked with helping aging Americans, was instrumental in launching the original reverse mortgage pilot program. Initially, 50 lenders participated in the program and the first government-insured reverse mortgage was given in 1989. The program experienced another growth spurt in 1998 when all lenders were encouraged to partake.
Since that time, hundreds of thousands of aging American’s have participated in the reverse mortgage program either through the FHA or private, lending institutions.
