How does a reverse mortgage differ from a home equity loan?
Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. The difference is, with a home equity loan you must make monthly payments on the money used. With a reverse mortgage you don’t have to make any monthly payments for as long as you live in the house.
A. Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. They differ in that with a home equity loan you must make monthly mortgage payments. However, with a reverse mortgage you do not make any monthly mortgage payments for as long as you stay in the home.
While both reverse mortgages and home equity loans enable senior homeowners to turn the equity in their home into spend able dollars, there are important differences between these two types of mortgages. First, home equity loans require regular monthly payments in order to repay the loan. These payments begin as soon as the loan is settled. Second, home equity loans are based on the borrower’s income and credit history. A home equity loan borrower may be required to re-qualify for the home equity loan each year.
While both Reverse Mortgages and home equity loans enable you to turn the equity in your home into spendable dollars, there are important differences. With a home equity loan, you must make regular monthly payments to repay the loan. These payments begin as soon as the loan is originated. To qualify for such a loan, you must have a monthly income great enough to make those payments. A Reverse Mortgage has two principal differences from the typical home equity loan: You do not repay the loan as long as the home remains your principal residence. Your income is not considered when qualifying you for the loan. Who is eligible for a Reverse Mortgage? You, and any co-borrowers, must be at least 62 years old and either own your home free and clear or have a very low outstanding mortgage balance. You also must agree to attend a consumer education session on Reverse Mortgages. Family members are strongly encouraged to attend these sessions with you. How much money can I borrower with a Reverse
