HECM vs HELOC

HECM vs HELOC - Advantages of a HECM Reverse Mortgage

Over 1.5million baby boomers utilitize HELOC’s on an annual basis as a way to access their home equity to help fund retirement, pay for home improvements, consolidate debt, pay for home healthcare or many other reasons. Today, we want to address the advantages to these baby boomers of using a HECM Reverse Mortgage instead of a HELOC as a way to access their home equity to help them in retirement!

HECM vs HELOC:

1)     No Required Monthly Mortgage Payments

a.    HECM - Payment Optional loan. No required principal & interest payments required. Frees up monthly cash flow in retirement

b.    HELOC – Regular monthly payments required as soon as you access the line and payments often rise when the draw period ends.

2)     LOC That Grows Over Time

a.    HECM – LOC grows automatically each year based on current rates, giving you access to more available funds in the future.

b.    HELOC – LOC is fixed at time of closing and may be reduced or frozen based on market conditions.

3)     Designed for Retirees

a.    HECM - Created specifically for homeowners age 62+, offering flexible access to tax-free funds.

b.    HELOC – Not built for fixed-income borrowers. Requires ongoing income and strong credit

4)     Long-Term Security

a.    HECM – FHA insured, non-recourse loan – you can never owe more than the value of your home

b.    HELOC – Lender control that can add future risks and payments always required (interest only or principal and interest)

 HECM (Reverse Mortgage) HELOC

  *Monthly Payments Required             NO YES

     *Line of Credit Growth YES NO

     *Availability of Funds LOC or Monthly Income LOC Only

     *Non-Recourse Loan YES NO

     *Designed for Retirees YES NO

The bottom line is that HECM’s (Reverse Mortgages) are built for retirement living, not borrower stress! A HECM gives a senior borrower more flexibility, more options, more protections; and is a better option for many baby boomers looking to access equity from their home to enhance their retirement.

SimpleReverse offers the tools, resources and training to help you understand and learn how to successfully sell reverse mortgages to your senior customers. If its marketing tools, marketing ideas, product training, scenarios or just a basic question; we are here as a resource to help you expand your knowledge and grow your business!! 



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