Reverse Mortgage vs. HELOC

Reverse Mortgage or HELOC – Which is Best? Reverse Mortgages

If you’ve decided to tap into your home equity during retirement, there are a few different ways to go about doing this. Most likely, your options will come down to a Reverse Mortgage or a home equity line of credit, or “HELOC”.

Reverse Mortgage vs. HELOC

A reverse mortgage and a HELOC have a lot in common.

  • Both a reverse mortgage and a HELOC are loans secured by the equity in your home.
  • After taking out a line of credit or a reverse mortgage, you can repay the loan at any time.
  • You will accrue interest over time with both loan types.

There are also some distinct differences.

  • With a HELOC, you will begin making interest payments right away, whereas with a reverse mortgage, you will never need to make a payment until you pass away or move from your home.
  • A HELOC requires a certain credit threshold as well as a minimum level of income. With a reverse mortgage, the borrower’s financial picture is analyzed according to different terms that may consider credit and income, but are not now dependent upon or limited to those factors.
  • The available loan amounts from a HELOC and a reverse mortgage are not the same. You can find out how much you can borrow using online calculators.
  • A reverse mortgage allows for a lump sum option or a line of credit, while a HELOC is always in the form of a line of credit.

The best choice will depend on your financial situation and preferences.

See How Much You May Be Eligible To Borrow With A Reverse Mortgage

NewRetirement Planner

Do it yourself retirement planning: easy, comprehensive, reliable

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