Reverse mortgage, HELOC or cash-out refinance: how they compare
Quick Answer
The biggest difference is monthly payments. A HELOC, home equity loan or cash-out refinance needs a payment every month and depends on your income and credit. A reverse mortgage, for homeowners 62 and older, needs no monthly mortgage payment, but the balance grows and you still pay taxes, insurance and upkeep.
Which one fits depends on whether you can afford a monthly payment, how long you plan to stay in your home, and what you need the money for.
Guides
- HELOC or cash-out refinance: which way to tap your equity?A HELOC and a cash-out refinance compared: how each works, what changes about your mortgage, costs and limits.
- Reverse mortgage or HELOC: which fits you?How a reverse mortgage and a HELOC differ on monthly payments, cost, qualifying, and what happens to your balance over time.
- Reverse mortgage or home equity loan: what's the difference?A reverse mortgage and a home equity loan compared on payments, how you get the money, cost and what you owe over time.
Run your own numbers with the reverse mortgage calculator, or see every question we answer about compare your options.
Common Questions
Which option is cheapest?
It depends on your rates and fees. The CFPB notes that a home equity loan or HELOC might be a cheaper way to borrow than a reverse mortgage, whose closing costs are typically higher, but those loans have monthly payments and depend on your income and credit.