Heloc vs. Reverse mortgage

Home Equity Line of Credit vs. Reverse Mortgage Line of Credit

What are the differences and similarities between a reverse mortgage line of credit and a home equity line of credit?

HELOC RMLOC
Requirements for income and creditworthiness. No requirements for income and credit score.
Homeowners must still make monthly payments to repay the loans. No required monthly payments from the homeowner: Homeowner can receive proceeds from equity*.
The homeowner is still responsible for real estate taxes, insurance, and maintenance. The homeowner is still responsible for real estate taxes, insurance, and maintenance.
Foreclosure possible if the borrower does not make scheduled payments. Becomes due and payable if specific requirements are not met.
Must be repaid on a specified monthly schedule during the term of the loan. Does not need to be repaid until the borrower passes away; the dwelling is transferred, or the borrower ceases to occupy the dwelling as a principal dwelling*.
Terms based solely on creditworthiness, income and equity. Proceeds based on the age of the youngest borrower, home value, and interest rate.
A home equity loan is a loan that must be repaid. A reverse mortgage is non-recourse loan so the responsibility of repayment is transferred to the property instead of the homeowner*.
Can be reduced, frozen or payment demanded. Can never be reduced, frozen or payment demanded.
No impact on eligibility for benefits because an equity loan is a debt, not income. Should NOT impact the borrower’s eligibility for Medicaid and SSI because a reverse mortgage is NOT considered income.
Left unused, the credit line remains stagnant and does not grow. Left unused, the credit line grows annually.
HELOC limit is NOT guaranteed to increase. Guaranteed to increase 3-5% a year
Heirs carry liability to repay. The house owes the balance, not a person and not the heirs.
Home equity is NOT protected from a market correction. Home equity IS protected from a market correction.

*Must live in the property six months or more a year, pay property taxes and home owner’s insurance and maintain the home.