Why Not Take an Equity Loan?

A Reverse Mortgage loan is different from a traditional loan or home equity line of credit for several reasons. A home equity line of credit requires that the borrower have a sufficient amount of income compared to their debt to qualify for a loan. This means you have to earn a specific dollar amount more than what your new mortgage payment would be. A Reverse Mortgage does not have any income requirements, as you will not need to make another mortgage payment.

A home equity line of credit requires the borrower to make monthly payments. If you are late or miss a payment you may be charged a late fee, and a penalty. This can affect the credit of the borrower. So while the borrower is away on vacation they must remember to make that payment. A Reverse Mortgage does not require payments, it pays the borrower instead, regardless of their current income.

The amount that the borrower qualifies for on a traditional home equity line depends on the credit, income and equity in the borrowers house. A Reverse Mortgage pays the borrower based on their age, the value of their house, the current lending limit, and interest rate. Generally the older a person is, and the more valuable their house is, and the lower the interest rate, the more one qualifies for.

Both loans require that the property taxes and insurance be paid on time. However a Reverse Mortgage can never foreclose on a home because of non payment of the loan. A home equity line can foreclose if payments are not made.