Page 1 - AAG110_HECM LOC HELOC Comparison Flyer

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). Only available to homeowners 62 or better, 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 required.
interest payment at a minimum, often (As with any mortgage loan, including HELOCs
for 10 years, then amortized over the or HECMs, borrower must continue to pay
remaining 20, which can substantially property taxes, homeowners insurance, and
increase your payment.* maintain the property.)
Line of Credit Does not grow under normal circumstances, Line of Credit Unused portion of the line of
Growth and requesting an increase often requires Growth credit grows.
full credit application, appraisal, and income
verification with other associated fees.

Accessibility The line of credit can be decreased or Accessibility Line of credit remains open as long as
closed without warning. 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 comply non-borrowing spouse leaves the home
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 penalties.
Penalty Penalty

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 to Annual Fee No annual fees to keep the HECM line
keep the loan open. of credit open.

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