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HECM VS. SENIOR HELOC
Two Ways to Access Home Equity
Understand the difference between these mortgage loan programs.
SIDE-BY-SIDE COMPARISON
How Do the Two Options Compare?
For homeowners 62 and older, both a Senior HELOC and a HECM can provide access to home equity without selling the home. But they work differently—particularly when it comes to monthly payments, access to available credit, costs and long-term planning.
A Senior HELOC functions much like a traditional home equity line of credit, while a HECM includes features specifically designed for older homeowners.
Here’s how the two options compare:
HECM
SENIOR HELOC
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No monthly principal and interest mortgage payments required*
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Financial assessment considers income, credit, and ability to meet ongoing property obligations
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Unused line of credit has a growth feature
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No set maturity date as long as loan requirements are met
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Available line is governed by the HECM loan terms
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FHA mortgage insurance and other closing costs apply
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May be useful for longer-term retirement cash-flow and liquidity planning
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Monthly payments are generally required
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Qualification typically considers income, credit and ability to repay
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Available credit does not typically increase over time
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May have a defined draw period or repayment terms
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Borrowing capacity may be affected by lender terms or changes to the line
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Typically has lower upfront costs
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May be a good fit for short-term or lower-cost borrowing needs
Which One is Right for You?
The right choice depends on more than how much equity you can access. Your age, income, cash-flow needs, how long you plan to remain in the home, and how you intend to use the funds can all influence which option makes the most sense.
Live Better Financial can help you compare both strategies so you can make an informed decision based on your goals—not simply the loan type.
*Borrowers must continue to meet the terms of the loan, including living in the home as their primary residence and paying property taxes, homeowners insurance, applicable HOA dues, and maintaining the property.