Difference Between a Reverse Mortgage and Bank Home Equity Loan

Many people do not understand the difference between a reverse mortgage and a bank home-equity loan. While these products will both allow you to tap into your home-equity, they are significantly different. Here are some of the differences between these two types of loan products.

Payments

One of the biggest differences between these two loan products is in the way that you receive your money. When you take out a home-equity loan, you are going to get the entire loan amount in one lump sum. With a reverse mortgage, you are going to get regular monthly payments over an extended period until your equity is paid for. A reverse mortgage is a way to create a source of regular income for yourself.

Qualifications

Another key difference is in the qualifications for each type of loan. With a home-equity loan, you are going to have to meet credit guidelines and make a certain amount of money to qualify. With a reverse mortgage, you do not have to have a certain credit score or have any other sources of income. In order to qualify for a reverse mortgage, you have to be a least 62 years old and have a house that is nearly paid off.

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