What is the Difference Between a Reverse Mortgage & Home Equity Loan?

What is the difference between a reverse mortgage and a home equity loan?

I get this question all the time and it is important to note the difference to understand how a reverse mortgage loan works.

Here is the significant difference between the loans:

A reverse mortgage, also known as HECM (Home Equity Conversion Mortgage) is a financial tool for seniors to borrow money against the equity in their home. A reverse mortgage does not require the borrower to make monthly payments, instead the loan is typically due when the last borrower passes away. With reverse mortgages, there are also certain requirements that the borrowers must meet; they must be at least 62 years of age or older to qualify for a reverse mortgage. The reason behind the age requirement is because this program was designed to help seniors “age in place” and live out their retirement years comfortably in their homes.

A home equity loan is a similar concept as homeowners are borrowing against the equity built in their home, but there are key differences to point out. One of the biggest difference is that the home equity loan requires that monthly mortgage payments be made while a reverse mortgage does not. Also, the home equity loan does not have an age requirement for any qualified homeowners who are looking to take out a home equity loan.

Is a reverse mortgage loan the right choice for you?  You can speak with an advisor at 1-888-808-8486 or send us a message to learn more about this great program.

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