Reverse Mortgage Line Of Credit

What Makes A Reverse Mortgage Line of Credit Different

Many people incorrectly think that a reverse mortgage line of credit and home equity line of credit are two different words for a “second mortgage,” but this is not true. It is true that for all three your home functions as a form of collateral. Both a reverse line of credit and home equity line of credit allow you to borrow money as needed, not in one lump sum like a second mortgage. However, a reverse mortgage line of credit has many distinct advantages for retired and senior citizens.

Both a home equity line of credit and a reverse mortgage line of credit are based on the equity you have in your home. That is, the difference between the appraised value of your home and any balance still due on your first mortgage. The more you own, the more you can borrow. A home equity line of credit, however, requires you to pay monthly payments of principal and interest on an ongoing basis. A reverse mortgage only requires you to pay the full amount of the loan when you sell your home, move out, or pass away.

The unique advantage here is that many seniors looking to spend their home equity are living on fixed incomes that do not allow them to add in the payments required by a home equity line of credit. The one final payment, usually paid near the end of life, is much easier and financially sound for most senior borrowers. Additionally, a reverse mortgage line of credit is available as long as you need, whereas home equity lines of credit are often closed unexpectedly on individuals who do not draw from them frequently.

Contact Us to Learn More About a Reverse Mortgage Line of Credit

The distinctions between reverse mortgages and home equity lines of credit can be difficult to understand at first. Hopefully, this guide has made them clearer for you. If you are curious if a reverse mortgage could fit your needs, contact us at Citizens Lending Group today to learn more about reverse mortgage requirements in California.