This article will help you learn more about a reverse mortgage vs. home equity loan. Are you an aged homeowner with different options to convert your home equity cash?

Both reverse mortgages and home equity loans will allow you to have cash in hand, which you can use on your living expenses. Both of them have their unique features, and you must understand them both before making a decision.

What Is A Reverse Mortgage?

When you apply for a reverse mortgage, it is the opposite of your regular mortgage. Here, you do not send money payments to the lender; instead, they send you monthly payments, increasing your debt and reducing your share in the house. You hold the home on to your name, but when you are going to sell your home, your loan becomes due.

What Is A Home Equity Loan

This is the opposite of a reverse mortgage because where the lender makes a payment to you, you make monthly payments to the lender. This money is borrowed against your home equity at a fixed interest rate. You receive the amount in 1 sum, and you have to pay it back in monthly installments. As your interest is fixed, your amount will not change. You can use the amount you have received as you wish, i.e., for repairs, renovations, remodeling, etc.

What Are Some Key Differences Between Home Equity Loan vs. Reverse Mortgage

All these allow you to turn your home equity into cash, but they have different repayments terms, disbursements, etc. ‘hence these are the factors that make them different from one another.

Disbursement Terms

  • Home Equity Loan: You will receive it in one go
  • Reverse Mortgage: You will receive the total amount in monthly payments, etc.


  • Home Equity Loan: You have to return the loan in fixed monthly payments based on a fixed interest rate over a set fixed period of time.
  • Reverse Mortgage: When the loan matures, you return the full amount in one go.

Age and Equity Requirements

  • Home Equity Loan: In general, there are no age requirements, but you will need to have a minimum of twenty percent equity in your home.
  • Reverse Mortgage: This is possible only if you are above the age of sixty-two years and own the home.

So now that you know the difference between a reverse mortgage and a home equity loan, it will be easier for you to decide. Meet the lenders, understand the requirements, do your assessment and research, and only when you should go ahead and decide. But if you are still not sure and need assistance, visit us at Red Door Funding, where we have the best team who will be able to assist you and solve all your queries. Call us at 832-539-1099 to learn more.

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