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What is the difference between a Home Equity Line of Credit and a Reverse Mortgage. I’m trying to help my mother get some money for a new oil furnace and some repairs on our garage.

5 Thoughts on Home Equity VS Reverse Mortgage?
  1. Reply
    Mike M.
    August 21, 2011 at 1:02 pm

    Home equity line…works just like a credit card, you pay a percentage of the balance each month or you can pay any amount between “min payment” and the whole balance. The interest rate is adjustable. You can use the line (your given checks) as needed up to your “limit”.
    Reverse Mortgage…The bank pays a lump sum, or monthly payment to her, she lives there until death (still makes repairs,Pays the taxes, etc), then the home is the banks. The amount she will get depends on her age and what the bank considers her life expectancy. Usually you get about half the market value of the home.

    If she can afford it the home equity is the way to go

  2. Reply
    Heather M
    August 21, 2011 at 1:32 pm

    Reverse Mortgage:
    A reverse mortgage (known as lifetime mortgage in the UK) is a type of loan available to seniors (62 and over in the US), used as a way of converting their home equity (the value of the home, minus the amount of any existing mortgages) into one or more cash payments while retaining ownership of the property (continuing to live there) and avoiding monthly payments. Repayment of the loan is deferred until the borrower is no longer living in the home.

    A reverse mortgage borrower may encounter many financial hazards in taking out a reverse mortgage. First, reverse mortgages are very expensive while promising an uncertain amount of benefits. For example, a typical reverse mortgage may provide to the consumer a $ 300 per month payment with a monthly compounded interest rate of 1%. Over the course of ten years, the borrower will receive $ 36,000, but by that time she will owe almost $ 70,000-almost twice as much as she has received.
    A home equity loan
    A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral. Montly payments are required.

  3. Reply
    August 21, 2011 at 2:18 pm

    With the home equity loan you have to make payments to the bank, this isn’t necessarily the best thing if you’re in need of income. Reverse mortgages require no payments and the equity can not be outlived. Be careful, however, as reverse mortgages aren’t for everyone.

  4. Reply
    August 21, 2011 at 3:01 pm

    much better EQUITY!Some times after Financial Needs Anal. you can even save money and time.If you want find out more I`ll give you contact NR.
    This company try to get people out from the debts and in the same time they can help you with Equity,second mortgage,loans etc. My friend instead of 20 years now will pay off mortgage in 17years and she almost same amount.And she even get cash to do house improvements….
    If you are interested contact me!
    Good luck :)!

  5. Reply
    Byron W
    August 21, 2011 at 3:47 pm

    Reverse Mortgage –> The amount owed gets larger over time. Also, it doesn’t come due until death or a permanent move.

    HELOC doesn’t come with the same assurances that the senior will be able to remain in the home.

    If your mom is going to live in the home for the rest of her life, and she is cash strapped, reverse mortgage should def be considered.

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