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Reverse Mortgages: A Brief Summary And History 

Jordan Major

Cashflow is a prominent concern for many older people (age 60 and older) as they continue to age, and their income sources decline. For many, home equity represents their most significant asset, and it plays a critical role in retirement planning. If you’re senior facing financial challenges, you can opt for a reverse mortgage option to convert some of the equity of your house into cash without having to sell your home. 

Reverse Mortgage: Is It For Me? 

Reverse mortgages are great for people in need of extra cash or those looking to consolidate debt or reduce their monthly payments. Funds received from reverse mortgages are entirely tax-free. You can repay the loan at any time. Generally, you will need to start making repayments if you sell the house attached to the reverse mortgage loan or your surviving partner dies. However, be aware that the reverse mortgage loan can still be voided if you break any of the loan conditions that you have agreed once you signed the loan. 

The history of reverse mortgages

The idea of a reverse mortgage was introduced in 1961 when a loan company named Nelson Haynes of Deering Savings & Loan decided to help a widowed wife stay in her home after losing her husband. The loan company created a form that has since become known as a reverse mortgage loan. Due to this newly invented loan, the woman was able to keep her house and, at the same time, access cash when she needed it.

How to apply for a reverse mortgage?

If you decide to get a reverse mortgage, you have two options. You can apply for it through a government agency or through a private lender, like a bank. The government-backed version is known as a home equity conversion mortgage and comes with government-guaranteed backup. A reverse home loan taken through a private lender does not offer this benefit. This is the only difference between the two options. 

How will I be paid? 

When you apply for your reverse home loan (and if your application is successful), you will have to choose how you would like to have the money paid to you. The most popular option is to get the money transferred to you directly into your bank account every month. This is the most popular option as it mimics the pattern of working full-time. This options also allows you to plan your monthly budget easier. 

You can also get paid by a line of credit, which will allow you to access the money in smaller amounts on an ad hoc basis. Finally, you can choose to receive money as a mass payment, which is a good option for those wanting to cover unexpected expenses. 


A reverse mortgage is an excellent option for those who need extra cash and are ready to convert some of the equity of their house into cash without having to sell their home. However, it’s vital to remain conscious of the fact that it’s still a loan. Suppose you choose to apply for a reverse mortgage and are successful in your application. In that case, you will be legally bound to comply with your lender’s loan conditions. 

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