Reverse Mortgages vs. Home Equity Loans
Both of these products will allow you to borrow in return for the equity of your home. Remember that you can borrow a maximum of 85% of the home’s value, which includes the original mortgage in case you have one.
The major difference between a home equity loan, a HELOC, and a reverse mortgage is that the homeowner does not have the responsibility to make the monthly payment. Furthermore, any remaining funds from a reverse mortgage do not have to get repaid until the borrower moves away permanently, or passes away.
In the case of a HELOC or a home equity loan, the borrower has to make monthly payments until the loan payment is made. Home equity loans could be more difficult for the retirees and the elderly to qualify for since the lenders require you to have a source of income.
On the bright side, the HELOCs and home equity loans do not need you to be 63 years old. Besides, there could also be a lower rate of interest and fees compared to reverse mortgages.