What is a HELOC or home equity line of credit?
A home equity line of credit (HELOC) is a loan that uses your house as collateral to secure the repayment of the borrowed money. With a HELOC, you can access a revolving line of credit, similar to a credit card, using the equity in your home. The advantage of a HELOC is that it offers flexibility in the amounts you borrow, with the ability to borrow as little or as much as you need. However, if you fall behind on payments, your lender has the right to sell your home to recover the debt owed.
Is a HELOC the same as a reverse mortgage?
It's important to note that a reverse mortgage is not the same as a HELOC. While both loans use your home's equity as collateral, a reverse mortgage offers a lump sum payment rather than a revolving line of credit. Additionally, a reverse mortgage does not require monthly payments on the amounts borrowed. Instead, the loan becomes due when the borrower dies, sells the home, or moves out permanently. However, the borrower must maintain the homeowner's property insurance and pay property taxes.
Unfortunately, maintaining homeowner's property insurance can be a challenge in some areas, especially after natural disasters such as hurricanes. If you're facing foreclosure due to missed payments or other issues, it's important to seek legal advice right away. The team at Kyle & Kyle Law has helped many families in similar circumstances and can provide strategic legal advice to help you make informed decisions. Contact our office at 877-KYLE-LAW (877-595-3529) to schedule a free consultation with an attorney to get started. Remember, the sooner you act, the more options you may have.