Learn how a reverse mortgage and a home equity loan compare.
A home equity loan and HELOC allow you to borrow against the equity in your home, and they function differently than a traditional mortgage. Learn the key differences between each loan type.
Know your options before using your home as collateral to get cash ; By Amy Fontinelle Updated July 22, 2024 · Reviewed by Charlene Rhinehart · Fact checked by Michael Rosenston
[citation needed] See also [edit] Home equity Home equity line of credit Mortgage equity withdrawal Reverse mortgage References [edit] ^ "What is a home equity loan?". Retirement and Estate...
Homeowners can use their home equity to get cash via reverse mortgages or home equity loans and HELOCs. Here are the pros and cons of each.
Need to access the equity in your home to help with your current finances? Learn the difference between mortgages versus home equity loans and HELOCs.
Key takeaways ; Home equity loans, HELOCs, and cash-out refinancing are three popular ways to borrow using your home as collateral. ; A cash-out refinance replaces your existing mortgage while home equity loans and HELOCs involve taking on an additional debt. ; With all three, the amount you can borrow will depend on the amount of equity (ownership stake) you have in your home. ; Home equity loans and HELOCs may be quicker to get, but cash-out refis offer lower interest rates.
Reverse mortgages let homeowners 62 or older borrow against their home equity, but HECM and single-purpose loans differ in costs and flexibility.
Key Takeaways ; Reverse mortgages, home equity loans and HELOCs can convert your home's equity into usable cash. Reverse mortgages may be a good choice for people age 62 and older who don't plan to pass their home to heirs. Home equity loans may be a fit for homeowners who need to borrow a lump sum to cover a large one-time expense or consolidate debt, whereas HELOCs are best suited for those who want to access cash as needed to cover expenses.
A reverse mortgage is a type of home loan for seniors ages 62 and older. Browse Investopedia’s expert-written library to learn about how they work and more.