Wednesday , February 20 2019
Home / Money / Reverse Mortgage vs HELOC
Reverse Mortgage or HELOC

Reverse Mortgage vs HELOC

The reverse mortgage vs HELOC – which one makes the most sense for your situation? While the answer is not easy to derive, we examine the pros and cons of both so you can make the best decision for your lifestyle.

If you’ve worked hard and paid into your home, yet find yourself needing some cash sooner than later, you can explore your options with a reverse mortgage vs HELOC. A reverse mortgage is a loan that you take out on your home for cash-out equity, payable only after you die from your estate. A HELOC is a home equity line of credit that you take out in the present, with payments due on the funds you borrow and an assigned interest rate. Keep reading to learn which one may make the most sense for you.

Pros of a Reverse Mortgage

A reverse mortgage is a viable way to cash out some of your home’s equity without having to absorb a monthly payment. But there are some requirements. You have to have your home mostly paid off and be of the age of 62 or older and the primary occupant. It does offer some perks, though.

  • No payments are due until after you die.
  • You can cash out up to 50% or more of your equity.
  • Available in lump sum, monthly payment or credit line.
  • Fast closing process takes only a few weeks.
  • Is not based upon your credit rating or income.

 

Cons of a Reverse Mortgage

Like anything attractive in this world, a reverse mortgage is not without its share of cons, either.

  • You are required to be a primary resident for at least two years.
  • If you sell your home, you have to pay off the loan right away.
  • Can make it difficult to leave behind an estate for your loved ones.
  • Will put a lien on your home against the available equity.
  • Interest rates and closing costs are high.

 

Pros of a HELOC

A home equity line of credit, or a HELOC, is another good option for borrowing. This loan is income and credit based, and comprises a higher interest rate. The amount you can borrow is bank approved and is mostly based upon the equity that your home holds.

 

  • Fast approval time, in a matter of days.
  • Locked in interest rate, but higher than standard home loan.
  • Based upon your equity, credit rating and income.
  • No early repayment fees, no closing costs.
  • Use the cash as you need it.

 

Cons of a HELOC

There are some associated cons to using a HELOC loan that you should be aware of.

 

  • Ties up your credit rating and debt-to-income ratio.
  • Attaches a lien to your home for the amount borrowed.
  • Is limited by the equity you have in your home.
  • Amounts borrowed are due via monthly payments right away.
  • Interest rates are higher than a conventional equity loan.

 

 

So there you have it. The reverse mortgage vs HELOC loan with the pros and cons explained. When you sum it all up, provided that you meet the requirements, a reverse mortgage seems to make more sense. No income requirements, equity based, low interest rates, lump sum cash options and no repayment until death are all likeable attributes of the reverse mortgage.

Check Also

Reverse Mortgage pros

5 Upsides To An HECM Reverse Mortgage

As you near your golden years, the last thing that you want to have to ...

28 comments

  1. Usually I don’t learn article on blogs, but I would like to say that this write-up very forced me to check out and do it! Your writing taste has been amazed me. Thank you, very great article.

  2. Hey very cool site!! Man .. Beautiful .. Amazing .. I will bookmark your blog and take the feeds also…I’m happy to find a lot of useful information here in the post, we need work out more strategies in this regard, thanks for sharing. . . . . .

  3. Enjoyed examining this, very good stuff, thanks .

  4. I and also my friends were actually digesting the nice pointers found on your site and then suddenly developed a terrible feeling I had not expressed respect to the web site owner for those tips. My men ended up certainly excited to read all of them and have now honestly been making the most of those things. Appreciate your genuinely very kind and then for utilizing these kinds of tremendous resources most people are really eager to know about. My personal honest apologies for not expressing gratitude to you sooner.

  5. Undeniably consider that that you said. Your favorite reason appeared to be at the web the simplest factor to have in mind of. I say to you, I certainly get annoyed whilst folks consider issues that they plainly do not recognise about. You managed to hit the nail upon the top as well as outlined out the entire thing with no need side-effects , other folks could take a signal. Will likely be back to get more. Thanks

  6. Sweet blog! I found it while searching on Yahoo News. Do you have any tips on how to get listed in Yahoo News? I’ve been trying for a while but I never seem to get there! Thanks

  7. I consider something really special in this site.

  8. You made some decent factors there. I looked on the web for the difficulty and located most people will associate with along with your website.

  9. I am not rattling great with English but I get hold this really easygoing to read .

  10. Great, google took me stright here. thanks btw for info. Cheers!

  11. Respect to website author , some wonderful entropy.

  12. I get the feeling that you’re bang on about this.

  13. Hello would you mind letting me know which webhost you’re using? I’ve loaded your blog in 3 completely different browsers and I must say this blog loads a lot quicker then most. Can you recommend a good internet hosting provider at a fair price? Thanks a lot, I appreciate it!

  14. I love reading through and I believe this website got some genuinely utilitarian stuff on it! .

  15. I am glad to be one of the visitors on this great website (:, appreciate it for posting .

  16. Cheers, great stuff, I enjoying.

  17. stays on topic and states valid points. Thank you.

  18. I like the valuable info you provide in your articles. I will bookmark your weblog and check again here frequently. I’m quite certain I will learn many new stuff right here! Good luck for the next!

  19. Hi, I think your site might be having browser compatibility issues. When I look at your website in Ie, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, fantastic blog!

  20. I have been exploring for a little bit for any high quality articles or blog posts on this kind of area . Exploring in Yahoo I at last stumbled upon this website. Reading this information So i’m happy to convey that I’ve a very good uncanny feeling I discovered just what I needed. I most certainly will make certain to don’t forget this website and give it a glance on a constant basis.

  21. You can definitely see your skills in the work you write. The world hopes for even more passionate writers like you who are not afraid to say how they believe. Always go after your heart.

  22. F*ckin’ awesome issues here. I’m very happy to peer your article. Thank you a lot and i am taking a look ahead to contact you. Will you please drop me a mail?

  23. You have observed very interesting details! ps decent internet site. 🙂

  24. I went over this site and I think you have a lot of good information, saved to fav 🙂

  25. Like!! I blog frequently and I really thank you for your content. The article has truly peaked my interest.

Leave a Reply

Your email address will not be published. Required fields are marked *