While both reverse mortgages and home equity loans enable senior homeowners to turn the equity in their home into spendable 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. In contrast, a reverse mortgage does not have to be repaid as long as the home remains the senior’s primary residence. In other words, the loan becomes due only when the senior no longer occupies the property.
Second, home equity loans are based on the borrower’s income and credit history. A home equity loan borrower may be required to requalify for the home equity loan each year. If the borrower does not qualify, than the lender may require that the loan be paid in full immediately. However, income and credit are not obstacles for seniors who want a reverse mortgage because there are absolutely no income or credit requirements to qualify. It should also be noted that there are no requalification requirements.
Use our reverse mortgage calculator to determine the balance of a reverse mortgage loan.