California Reverse Mortgage News

Here are a few reasons why A HECM Reverse Mortgage Line of Credit is better than a HELOC

HECM Line of Credit Lender Can't Close Out Your Credit Line Without Your Consent.
A HECM Line of Credit can not be closed by the lender.  Remember when equity took a dive in 2007 and lenders closed out your HELOC (home equity line of credit) without your permission?  A reverse mortgage lender is prohibited from doing that. Once all qualified borrowers have passed away, the line will be frozen at that time.

Reverse Mortgage Has More Flexible Payment Terms.
A typical payment terms on a HELOC is usually 25 years, with the first 10 years being  the time you can take advances and make interest only payments, than that option goes away, and than the remaining 15 years you get a big payment jump, and now have to payoff the entire loan over the remaining 15 years.
The HECM Line of Credit doesn't require any payments ever.  However, you can choose to make payments if you so desire, at any time. 

HECM Available Line of Credit Can Increase Dramatically Over Time.
If you run out of funds on the HELOC, you have to refinance and get more money and you have to qualify with enough income, equity and good credit to obtain the refinanced HELOC.
With a HECM Reverse Mortgage Line of Credit, there is a built in growth rate tied to the unused line of credit.  It actually increases every month for more tax free money for you to use at your discretion.  No refinance needed.
The amount of the credit line increase will depend on how much is left on the line of credit, and the growth rate (which is attached to the line), but it's possible for your line of credit of usable money to double or triple over time, again it's tax free money.

A Reverse Mortgage Has "Gap Insurance" Built In Case Your Home Is Upside Down
A HECM Line of Credit has FHA MIP, which ensures if the property when being sold has a mortgage balance higher than the value, the balance is covered and heirs need not worry.
This is not the case with a HELOC.  MIP is not built into a HELOC.
These are a few of the differences between a HELOC and a HECM Reverse Mortgage Line of Credit. 
If you have any question or concerns regarding the HECM Reverse Mortgage Line of Credit or the HECM Reverse Mortgage Line of Credit Growth Rate, feel free to visit my website for free videos that further explain this concept, at or feel free to give me a call or drop me an email.

Kevin Walton
Certified Mortgage Advisor
800-506-0632 ext. 0

Posted by Kevin Walton on September 8th, 2015 2:52 PM