Decide Between HECM & HELOC: A Clear Comparison for Homeowners

Unlock the financial potential of your home with a Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage.

Choosing the Right Way to Access Your Home’s Equity

Deciding how to access your home’s equity can feel overwhelming. Let’s explore the key differences between HECMs and HELOCs, so you can make an informed decision for your financial future.

Home Equity Conversion Mortgage (Reverse Mortgage)

A reverse mortgage, or HECM, is a loan that replaces your existing mortgage. It allows you to tap into your home’s equity without monthly mortgage payments, providing access to cash and potentially enhancing your retirement income.

Would you like a side-by-side comparison with HELOCs added next? I can build a clear, structured table to highlight the pros and cons.

Benefits of a HECM

Elimination of Monthly Mortgage Payments
Access to Tax-Free Funds
No Repayment Required During Your Lifetime (in most cases)
Potential for a Line of Credit

Home Equity Line of Credit (HELOC)
A HELOC is a revolving loan that is secured by the value of your home with spending limitations similar to that of a credit card. You may not exceed the maximum credit limit and, similar to a traditional mortgage, you will make monthly payments for a fixed term. It is set up in addition to and independent of your current mortgage.

Benefits of a HELOC

Low interest rates in most cases
Lower upfront costs
May be more suitable for short term-needs

* You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to Federal Housing Administration (FHA) requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.

This is not a commitment to lend. Any equity used in a refinance may decrease the amount of equity available to you in the future. Application approval is subject to complete underwriting review based on program guidelines; not all applicants may qualify. Limitations may apply. Not available for properties in Hawaii.

Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. You must live in the home as your primary residence, continue to pay required property taxes, and homeowners insurance, and maintain the home according to FHA HECM requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.