Page 1 - WSAAG096_HECM LOC vs HELOC

HELOC vs. HECM Line of Credit

Which option is better for you?

Most homeowners are aware of the opportunities and challenges of a home equity
line of credit (HELOC). But only available to homeowners over the age of 62, a Home
Equity Conversion Mortgage (HECM) line of credit can offer greater advantages. The

charts below compare the two.

Home Equity Line of Credit (HELOC) HECM Line of Credit

Payments A HELOC requires you to pay a monthly Payments No monthly mortgage payments are
interest payment, at a minimum, often required. Borrower must continue
for 10 years, then amortized over the to pay property taxes, homeowners
remaining 20, which can substantially insurance, and maintain the property.
increase your payment.

Line of Credit Does not grow under normal circum- Line of Credit Unused portion of the line of credit
Growth stances and requesting an increase Growth grows.
often requires full credit application,
appraisal, income verification with other
associated fees.

Accessibility The line of credit can be decreased or Accessibility Line of credit remains open as long
closed without warning. as the borrower lives in the home
and complies with all loan terms.

Due Date Typically due at the end of 10, 20 or 30 Due Date Due when the last borrower or eligible
years or if the borrower does not com- non-borrowing spouse leaves the home
ply with loan terms. (or does not comply with the loan terms).

Pre-Payment May have a penalty. Pre-Payment No annual fees or pre-payment
Penalty Penalty penalities.

Government- Not insured by the Federal Housing Government- Insured by the Federal Housing
Insured Administration. Insured Administration.

Annual Fee A HELOC often requires an annual fee Annual Fee No annual fees to keep the HECM
to keep the loan open. line of credit open.