INFOGRAPHIC: Is a HECM or HELOC Better for Your Retirement Funding Needs?

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HECM vs HELOC: Which Makes More Sense to Help Fund Your Retirement?

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HECM vs HELOC: Which Makes More Sense In Retirement?

A HELOC is a good financial tool, but only for a right purpose. A HELOC can be a ticking time bomb for seniors who try to use it as a long-term cash source in retirement. The more you borrow, the higher your payment goes. If interest rates go up, your payment goes up too. And once the draw period ends, you may wish you had never heard of a HELOC. Depending on how much you’ve borrowed, your payment could jump by hundreds of dollars per month.

If you’re tight on cash, the last thing you need is a payment that can increase over time – especially if failing to make that payment could cost you your home.

If home values fall, your credit gets worse, or financial markets melt down again, your lender could revoke or suspend your available HELOC credit line with little notice. That could put you in a tough financial position if you need cash fast for unexpected expenses like medical bills or car or home repairs.

Avoid the Risks of a HELOC And Opt for a HECM Instead

A HECM reverse mortgage is actually designed to give seniors access to their equity without the headaches and risks that come with a HELOC:

  • You get the same flexibility and convenience as a HELOC and remain the owner of your home.
  • No payment is required as long as you pay required property charges (taxes, insurance, HOA dues, etc).
  • Your available credit line can never be revoked as long as you pay required property charges.
  • Your available credit line will grow larger over time, giving you access to more money automatically.

You never need to worry about your payment going up because there’s never a payment required. As long as you pay your required property charges, your available credit line can never be taken away. And best of all, your available credit line will automatically grow larger over time, giving you access to more cash if you need it.

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About Mike Roberts

Mike Roberts is the founder of, a published author, and a highly experienced mortgage industry veteran with over a decade of mortgage banking experience. When he's not working, he enjoys spending time with his family, skiing, camping, traveling, or reading a good book. Roberts is the author of The Reverse Mortgage Revealed: An Industry Insider’s Guide to the Reverse Mortgage, which is available on Amazon.