HELOC vs HECM Line of Credit

  • March 12, 2018

Two things I forgot to mention about the HELOC v the HECM Line of Credit:  An advantage the HELOC did have was current deduction of the interest payments.  With the new tax law, unless you can prove that the money was used for construction/improvement, there is no more deduction.  That may be hard to prove and was it all used for that?  In other words you can pretty much kiss the deduction goodbye.  Secondly, the HECM loan comes with no personal liability.  Only the home is responsible for paying back the reverse mortgage balance.  If the home has fallen in value and the loan balance has risen above that value, your heirs (or you) just walk away.  No personal liability.  Not true with a HELOC.  You can leave your heirs with a burden.  Here is that blog from January 7th.