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Home equity loan vs. reverse mortgage: Which will be better for 2025?
The unique economic climate of 2024 is quickly coming to close. While inflation finally dropped this year and interest rate cuts were issued for the first time since 2020, the American economy still has some way to go to fully recover from the inflationary period of recent years. And that means many Americans may be exploring new ways to make ends meet.
For homeowners, this can take the form of borrowing from their home equity. Whether it be with a home equity line of credit (HELOC), home equity loan or reverse mortgage, your home may offer you the best option for accessing a large amount of money at an inexpensive cost. But home equity loans and reverse mortgages, in particular, have pros and cons for homeowners to explore before applying. And with the evolving state of inflation and interest rates, it helps to know what to consider when trying to determine which will be preferential for 2025. Below, we’ll break down what to know.
Start by seeing how much equity you could borrow with a home equity loan here.
Home equity loan vs. reverse mortgage: Which will be better for 2025?
Here’s what to consider when comparing these two products for the new year:
Why a home equity loan may be better
A home equity loan functions as a lump sum of money, deducted from your accumulated home equity. Right now, home equity loans have some of the lowest interest rates available for any borrowing product. At an average of just 8.38% for qualified borrowers, home equity loans are cheaper than HELOCs, personal loans and credit cards. And they come with a unique tax advantage. If your home equity loan funds are used for eligible home repairs and projects, you may qualify to deduct the interest paid on the loan from your taxes for the year in which it was used. That all noted, your home functions as collateral in this borrowing exchange. So it’s not an ideal way to borrow money if you’re not confident in your ability to make all of the repayments.
Because of the repayment structure, however, it can be better than a reverse mortgage, especially at today’s lower rates. Unlike the latter which pays the homeowner, home equity loans will need to be repaid to the lender. This means that you can, in theory, increase your home’s value once the loan is paid back. Reverse mortgages, meantime, will eat into the equity of your home with the monthly payments paid directly to the owner. And that will only be changed if the owner dies or sells the home.
Learn more about your home equity loan options here.
Why a reverse mortgage may be better
Reverse mortgages are only offered to a portion of the homeowner community. With some rare exceptions, applicants will need to be age 62 or older to qualify. But if you can meet the requirements, this may be the easier way to boost your monthly finances. The equity borrowed will only need to be repaid in the aforementioned scenarios. So you won’t need to worry about making monthly payments on top of your existing financial concerns. And you won’t need to worry about interest rates, tax qualifications or the wider rate climate that can affect what lenders ultimately offer you. Just understand that any money withdrawn will ultimately reduce your home’s value and that could be a major contention for those who plan to pass their home on to beneficiaries after their death.
Learn more about your reverse mortgage options here.
The bottom line
The question of whether a home equity loan or reverse mortgage will be better for 2025 rests with the individual homeowner. For some a home equity loan will be smarter and safer while, for older homeowners, a reverse mortgage may be more applicable. Just be sure to research both options carefully before applying. With your home serving as the primary equity source in either scenario, it’s critical that you approach borrowing from it with care and nuance.
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Mitch McConnell warns RFK Jr. against effort to undermine polio vaccines
Senate Republican Leader Mitch McConnell issued an apparent warning Friday to Robert F. Kennedy, President-elect Donald Trump’s pick to lead the Health and Human Services Department, after The New York Times reported that one of Kennedy’s top advisers had filed petitions to revoke the approval of a polio vaccine and several other shots.
“Anyone seeking the Senate’s consent to serve in the incoming Administration would do well to steer clear of even the appearance of association with such efforts,” McConnell said in a statement.
McConnell, a polio survivor, denounced efforts “to undermine public confidence in proven cures” like the polio vaccine.
“The polio vaccine has saved millions of lives and held out the promise of eradicating a terrible disease. Efforts to undermine public confidence in proven cures are not just uninformed — they’re dangerous,” McConnell said.
McConnell credited the “miraculous combination of modern medicine and a mother’s love” with saving him from paralysis when he contracted the disease at two years of age, and he praised the “miracle” of “the saving power of the polio vaccine” for the millions of children who came after him.
The Times article focused in large part on the work of attorney Aaron Siri for the nonprofit Informed Consent Action Network, or ICAN, which petitioned the Food and Drug Administration in 2022 “demanding that the FDA suspend or withdraw approval” of Sanofi Pasteur’s inactivated polio vaccine, called IPOL.
Siri has been acting as an adviser to the transition team for Kennedy, who, if confirmed by the Senate, would oversee the FDA and the nation’s other public health agencies.
Siri called the Times article a “hit piece” that did not engage with the substance of the “legitimate” concern at the center of the petition he filed for ICAN.
“ICAN’s petition, filed in 2022, makes the reasonable request that the FDA, as required by federal law, require a proper clinical trial for IPOL prior to licensure,” Siri posted on X.
The Times report on Siri’s work sparked a renewed round of backlash against Kennedy by Democrats, too, who have criticized Trump for months over his ties with Kennedy.
As HHS secretary, Kennedy would have significant direct authority as the nation’s health secretary over how vaccines are studied, approved and recommended in the U.S. He and his FDA commissioner would also oversee how government lawyers respond to many of the legal battles Siri has launched against the agency over vaccines.
Kennedy himself has said he would not ban vaccines and has tried to distance himself from the “anti-vaccine” label, instead calling for further study of the shots. He recently resigned as chair of Children’s Health Defense, a nonprofit that watchdog groups have found for years to be spreading misinformation over fears about vaccines.
President-elect Donald Trump has said he might be open to getting rid of some vaccines “if I think it’s dangerous,” pledging to listen to Kennedy.
“We’re going to have a big discussion. The autism rate is at a level that nobody ever believed possible. If you look at things that are happening, there’s something causing it,” Trump said in an interview with Time magazine published this week, when he was asked if he’d sign off on a move by Kennedy to end childhood vaccination programs.
Extensive medical research has conclusively shown that vaccines do not cause autism.
Siri’s petition for ICAN has not progressed much at the FDA since it was filed in 2022. It is one of several legal efforts Siri has filed for groups against several shots, including a petition in 2020 over hepatitis B vaccines.
In a 2023 letter responding to the polio petition, the agency’s top vaccine official, Dr. Peter Marks, wrote that the FDA “has been unable to reach a decision on your petition because it raises issues requiring further review and analysis by agency officials.”
Siri’s petition targets IPOL, which is the only “single-antigen” polio vaccine currently recommended for use in the U.S. The vaccine was approved in the 1990s.
Many children who receive immunizations for polio often do not receive IPOL, but rather, one of several combination vaccines that blend a harmless version of the poliovirus with other recommended antigens for various vaccine-preventable diseases.
The CDC says IPOL is “mainly used as a travel vaccine for adults.” The agency says that the “body of scientific evidence overwhelmingly supports” the safety of polio vaccines.
Siri has hinted at plans for more petitions to the FDA, after Kennedy is in charge at HHS.
“It will help if there are outsiders, from the outside attacking in. For example, the FDA acts on petitions. If you want to license a product, you have to petition them. If you want a product to be withdrawn or reevaluated, you typically often have to petition them,” Siri told Del Bigtree, ICAN’s founder and a former campaign spokesperson for Kennedy, on his podcast last month.
“Somebody on the outside needs to be petitioning them,” Siri added.
contributed to this report.
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