(HECM) Reverse Mortgage vs (HELOC) Home Equity Line of Credit

Over 1.5million baby boomers utilize HELOC’s on an annual basis as a way to access their home equity to help fund retirement, pay for home improvements, consolidate debt, pay for home healthcare, or many other reasons. Today, we want to address the advantages to these baby boomers of using a HECM Reverse Mortgage instead of a HELOC as a way to access their home equity to help them in retirement!

1) No Required Monthly Mortgage Payments
a. HECM ( Reverse Mortgage) – Payment Optional loan. No required principal & interest payments required. Frees up monthly cash flow in retirement
b. HELOC – Regular monthly payments are required as soon as you access the line, and payments often rise when the draw period ends.

2) Line of Credit That Grows Over Time
a. HECM (Reverse Mortgage) – LOC grows automatically each year based on current rates, giving you access to more available funds in the future.
b. HELOC – LOC is fixed at the time of closing and may be reduced or frozen based on market conditions.
3) Designed for Retirees
a. HECM (Reverse Mortgage) – Created specifically for homeowners age 62+, offering flexible access to tax-free funds.
b. HELOC – Not built for fixed-income borrowers. Requires ongoing income and strong credit
4) Long-Term Security

a. HECM – FHAa. HECM – FHA-insured, non-recourse loan – you can never owe more than the value of your home

b. HELOC – Lender control that can add future risks and payments are always required (interest only or principal and interest)

The bottom line is that HECM’s (Reverse Mortgages) are built for retirement living, not borrower stress! A HECM gives a senior borrower more flexibility, more options, more protections, and is a better option for many baby boomers looking to access equity from their home to enhance their retirement.

We do both. I recommend the Reverse Mortgage because it has life lifetime expectancy- up to page 149.

The HELOC people argue that it doesn’t have high closing costs, but it does come with a high payment. For an interest-only 15-year with a balloon, your payment is $350.00; paying principal and interest is $600. So the 9% interest rates and having to make payments make the Reverse Mortgage the winner in my mind.

For more information, please call Scott Underwood at (205) 908-2993 or email scott@reversemortgagealabama.com. I have 19 years’ experience, and I am a broker for many lenders, so I should be able to give you the best deal that fits you. I also don’t have a large ad budget to work into each loan.