When Will Everyone Realize That In Most Cases, A Home Equity Line Of Credit is NOT a Substitute for a Reverse Mortgage

Once again, this morning, I was told by the accountant of my borrower, how a Home Equity Line of Credit (HELOC) is a better choice than a reverse mortgage because it is "much cheaper" and "less risky"

Let's get this straight: HELOC's and Reverse Mortgages are not comparable. They are apples and oranges. Here's why:

1) Most Reverse Mortgages borrowers cannot qualify for a HELOC today. Almost all HELOC lenders require both good credit scores and sufficient income to qualify, but let's assume that we are in the minority and CAN qualify for a HELOC.

2) HELOC's require MONTHLY PAYMENTS! If you cannot make those payments or worse, if you are planning to make the payments from the HELOC proceeds (yes, borrowing more to pay the loan?) then your time is limited before you are in trouble.

3) Only a Reverse Mortgage allows the borrowers to stay in the home for as long as they live there. The clock stops ticking, in contrast to a HELOC where the clock starts from the moment you draw on the loan. When the clock stops and you cannot make the payments on the HELOC anymore, you get FORECLOSED on and EVICTED. This will never happen with a reverse mortgage (as long as taxes and insurance are paid and the house is maintained)

4) If you are looking for extra income, only a reverse mortgage will pay you out for as long as you live in the home, even if you live to be 200 years old, the monthly payments NEVER STOP. This is the opposite of a HELOC, where if you start to draw from it, your payments grow and the time you can continue to draw from it is very limited and diminishes. Also, if interest rates rise, your HELOC payments go up, but your payments from a reverse mortgage never change.

So, anyone 62 or older qualifies for a Reverse Mortgage that guarantees that you can stay in the home that you love for as long as you want to, while a HELOC is only for a people who have good enough credit and income to qualify, and if you draw from the HELOC regularly, you will absolutely run out of money and time at some point and be in trouble if you can't make the payments.

HOW CAN YOU COMPARE THE TWO?