cuatro. Possessions Variety of: Both contrary mortgage loans and you will HELOCs are usually limited to possess top residences. Yet not, contrary mortgages may also be available for certain kinds of money characteristics, such duplexes otherwise triplexes.
5. Loan Limitations: Contrary mortgage loans features an optimum mortgage limit, hence may differ based on the borrower’s decades, family really worth, and you will interest levels.
six. Repayment: One of the several differences when considering contrary mortgages and you can HELOCs is the way they are paid down. With an opposing financial, the latest borrower does not have to make any money provided that because they live in our home. The borrowed funds is paid off when the borrower carries your house otherwise dies. With an effective HELOC, the fresh new debtor need certainly to generate monthly obligations to settle the loan.
Overall, the new eligibility requirements to possess reverse mortgages and you will HELOCs differ significantly. While both choice need consumers getting significant family guarantee, contrary mortgage loans be a little more available to earlier consumers having down profits and you may credit ratings. HELOCs, on the other hand, be more suitable for more youthful borrowers that have a good credit score and you can a good constant income. Eventually, your best option hinges on the fresh new borrower’s particular financial predicament and you may goals.
Who Qualifies to own Reverse Home loan and Family Equity Personal line of credit – Opposite Financial compared to: Household Equity Personal line of credit: That is Greatest