Hey,
As a homeowner, you can convert house equity into cash via a reverse mortgage. You can pay for day-to-day living expenses, healthcare and house maintenance costs this way. Another finance option to collect equity is HELOC. I will share with you the difference between HELOC and reverse mortgage. It will help you make smarter decisions.
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Take a look at the table to read reverse mortgage vs HELOC.
Reverse mortgage |
HELOC : Home equity line of credit |
|
How it works |
The lender pays you based on your property’s market value. Over time, equity decreases as the lender acquires more and more of your property. |
The borrower can borrow within the preset line of credit (as set by the lender) |
Age |
Must be older than sixty-two years to avail. |
No age requirement as such |
Property Ownership |
Title/Ownership of the home is held by you |
Title/ ownership is held by you until you are unable to pay your loan. |
Loan Amount |
The Borrower can take lump sum amount in loan |
The borrower can draw within the preset line of credit |
Eligibility |
Must have a home or small mortgage balance to avail. |
Must have at least twenty per cent equity to avail. |
Charges |
Balance + interest is due when selling the house |
Interest is charged on the money borrowed/withdrawn in the draw period instead of the total amount. |
Interest Charges |
Interest charged accumulates until the mortgage is terminated |
Generally have a variable interest rate. |
Closing Cost |
High closing cost |
Average closing cost, similar to a home equity loan |
This is all from my end on the difference between HELOC and reverse mortgage.
Read more:
Does heloc require appraisal
What happens when home equity line of credit expires?
How does HELOC affect credit score?
Which is better HELOC or home equity loan?
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What is the difference between HELOC and reverse mortgage?
Ishani
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3 Year
2022-12-21T08:56:53+00:00 2022-12-21T16:30:12+00:00Comment
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