If you are homeowner 55 Years+ and want to access your home equity and want to maintain the home ownership – you may use either reverse mortgage or HELOC to do that. Lets compare these two products and choose the best one for you.
Reverse mortgage
It allows you to access some of your home’s equity, in the form of tax-free money in either a lump sum amount or regular advances – all depending on what suits you and your needs.
The amount a borrower can access depends on their age, how much home equity they have and the interest rate
Home equity line of credit (HELOC)
It allows you to borrow up to 85 percent of the appraised value of your home (minus your pending mortgage balance) in the form of a line of credit.
Your monthly payment with a HELOC can vary depending upon the variable interest rate.
Let’s look at the pros and cons for both before you decide on any of them
Reverse mortgage
Pros
· No monthly payment required
· Increase monthly cash flow
· Tax Free Income
· Freedom to use funds
· Maintain the home ownership
· No income / credit criteria required
· Will not affect your social security benefits
Cons
· Loan Interest is liable
· Higher interest rate
· Will reduce your home equity
· To pay off – you will have to sell off your house (same as the case in normal mortgage)
· Minimum age – 55Yrs.
· Closing cost can make it more expensive
Home equity line of credit (HELOC)
Pros
· Easy accessible and cheap as compare to other loan options
· Flexible
· Very competitive interest rates
· Freedom to use funds available
· Need to pay interest only on the amount you use and not the whole credit limit
Cons
· Have to make monthly payments
· Need to qualify based on income or credit
· Processing fees and closing costs may be apply
· Its a second mortgage on your title.
Before you decide and apply for any of these two products, please ensure:
· Purpose of using the borrowed amount is clear
· Make a well informed decision - understand the product details
· Assess your short and long term goals
· Shop around and do comparison if it is best for me?
Both HELOC and Reverse Mortgages are designed as per the specific needs of people.
Reverse mortgages is for senior home owners above 55 years having substantial home equity and need to improve retirement life and does not want to make any monthly payment.
HELOC can be cheaper in comparison and gives a short-term solution to access the equity in your house.
Learn more and start the process today: http://bit.ly/MortgageForSeniors
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