Reverse Mortgage vs. HELOC: Comparing Equity Options for Homeowners 62 and Older
For homeowners 62 and older, both a reverse mortgage and a HELOC can turn equity into funds, but they work in almost opposite ways. I'm Phil Hagey, a loan officer with West Capital Lending. I'll walk you, and your family if you'd like, through both, with no rush.
Side by side
| Reverse mortgage (HECM) | HELOC | |
|---|---|---|
| Age | Typically 62 or older | No age requirement |
| Monthly mortgage payments | Not required while you meet the loan terms | Required, and amounts can rise when repayment begins |
| Loan balance over time | Grows as interest and fees are added | Goes down as you repay |
| Ongoing obligations | Live in the home as your primary residence and keep paying taxes, insurance, HOA dues and upkeep | Make payments as agreed and keep paying taxes and insurance |
| When it's repaid | When the last client sells, moves out permanently, or passes away, or if terms aren't met | On the schedule in your loan agreement |
| Counseling | HUD-approved counseling required for a HECM | Not required |
| Owing more than the home is worth | HECM is non-recourse: you and your heirs don't owe more than the home's value when it's sold to repay the loan | You owe the full balance |
| Effect on heirs | Less equity may remain. Heirs can sell, or repay to keep the home | Any remaining balance is repaid from the estate or a sale |
| Main trade-off | No monthly mortgage payment, but equity shrinks over time | Preserves more equity, but requires payments you must qualify for |
Features vary by lender and program. Phil gives you an estimate for each option so you can compare actual costs.
A reverse mortgage may fit you if…
- You're 62 or older and plan to stay in your home long-term
- You'd like to reduce monthly obligations in retirement
- You can keep up with taxes, insurance and upkeep
- Leaving the full home value to heirs isn't your top priority
A HELOC may fit you if…
- You have income to comfortably make payments
- You need funds for a specific project or a shorter period
- You want to preserve as much equity as possible
- You may move or sell in the next several years
Not sure? That's normal. I'll compare both with you and tell you plainly if neither is a good fit for you.
Learn more
Frequently asked questions
What's the biggest difference between a reverse mortgage and a HELOC?
A HELOC requires regular payments, while a reverse mortgage doesn't require monthly mortgage payments, but its balance grows over time. Phil Hagey explains both with you, and your family if you'd like.
Do I still pay anything with a reverse mortgage?
Yes. You must keep paying property taxes, homeowners insurance, any HOA dues, and maintain the home, or the loan can become due. Phil Hagey reviews these obligations with every client up front.
Can my heirs keep the home?
Yes, heirs can repay the loan to keep the home or sell it. With a HECM, they won't owe more than the home is worth when it's sold to repay the loan. Phil Hagey suggests including family in the conversation.
Is counseling required?
For a HECM, yes. Clients must complete a session with a HUD-approved counseling agency before applying. Phil Hagey can share how to find an independent counselor.
Want to compare both without any pressure? Call Phil at 949-864-1497. Family members are welcome to join.
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These materials are not from, and were not approved by, HUD, FHA, or any government agency. A reverse mortgage is a loan, and the balance increases over time. Clients must live in the home as their primary residence and keep current on property taxes, homeowners insurance, HOA dues, and maintenance, or the loan may become due and payable. HECM counseling is required. HELOCs are secured by your home. Loans subject to credit approval and property eligibility.