Reverse Mortgage or a HELOC?

Today's Question come from Vince: "Pat -- thinking about some financing on our place -- worth $500,000 as is, no current mortgage -- do you recommend we look at a reverse mortgage or a HELOC?"
My Answer: "It all depends on what you are going to do with the money. That's really a financial planning question. A HELOC will give you flexible money if you need it. It comes with a monthly payment based on the money you have drawn. A Reverse has several options. First, you kids both need to be over 62. Then, what do you want the money for? You can take a lump sum, have monthly "income" payments to you like a fixed income, or have a combination. You have no outgoing mortgage payments; the money is taken in the form of equity from your home. You can't ever be thrown out of your home. Another question is how long do you plan to live there and of course, the survivorship issues: How well are each of you set up in case of The Reaper. Reverse Mortgages are loans, so the money isn't viewed as income. HELOC are adjustable and open to interest rate swings and eventually need to be paid back and they impact monthly cash flow. Reverse Mortgages can be source of income and has several term options.
This is a bigger question than just "HELOC or Reverse Mortgage." It's a sit down and map it out question."
Message: There are many options. Don't just pick the flavor of the day. Get a plan. I can help. Pat Townsley, Mortgage Broker. Refinance, Purchase, Home Equity Line Of Credit (HELOC), Reverse, FHA. www.PTRE.net