What is an equity sharing agreement?

A shared equity agreement enables a home buyer or homeowner to share home equity in exchange for a one-time cash payment from an investor. Such agreements allow you to liquidate part of your equity for cash or a down payment. The homeowner doesn't pay off the investor with monthly payments or... Learn More at SuperMoney.com

What are the pros and cons of shared equity agreements?

WEIGH THE RISKS AND BENEFITS Here is a list of the benefits and the drawbacks of shared equity contracts. Pros Allows you to tap into your home equity without getting into debt.No monthly payments or interest charges.If your property drops in value, so does the amount you have to repay.Can help you... Learn More at SuperMoney.com

Who could benefit from equity sharing?

Several situations lend themselves to a shared equity finance agreement. You might benefit from a shared appreciation mortgage if one of these scenarios fits your situation. You want to cash-out on your home equity but you don't qualify for (or don't want) a HELOC or a home equity loan. Home equity... Learn More at SuperMoney.com

What if your home depreciates?

If your home loses value, you will only pay the investor the initial investment minus their share of the value drop. In the case of a substantial dip in the home's value, the investor could lose their entire investment. If this occurs, you won't pay any money to the investor. Here's an... Learn More at SuperMoney.com

What are the key features to consider with shared equity agreements?

All investors and their shared equity agreements aren't created equal. Choosing the right investor is crucial if you enter a shared equity agreement. Choose an investor who wants to develop a true partnership with you and share in your collective long-term success. Before signing, it's a good idea... Learn More at SuperMoney.com

Do shared equity agreements have prepayment penalties?

Most home co-investing companies do not charge a prepayment penalty and you can repay at any time during the term of the agreement. However, you should verify the prepayment policy directly with the company you are considering.

Do shared equity agreements have origination fees?

There is typically a fee associated with the cost of origination and appraisal. Generally speaking, these fees tend to be equivalent to the origination fees associated with a cash out refinance.

What is the difference between a share in home appreciation and home value?

When you agree to a home equity investment, you are effectively selling a stake in your home. There are two ways to do this. You can either sell a percentage of the future appreciation of your home or of its future value. It those two options sound similar, it's because they are. The differences... Learn More at SuperMoney.com

Best Shared Equity Agreements | August 2021

Shared equity agreements, also known as real estate profit sharing, allow you to tap into your home's equity without getting into debt. There are no interest rates or monthly payments to worry about. However, they are not for everyone. Are you considering a shared equity program? Here’s everything you need to know about how shared equity agreements work.

Shared equity agreements, sometimes known as home equity investments, allow homeowners to cash out on their equity without getting into debt. It works like this. Investors give homeowners a lump sum in exchange for a share in the future value of their homes. When the homes are sold (or when the contract term ends), the investors receive their share from the sale. If the value of the house increases, so does the amount the investor receives. If the house drops in value, the investor also shares in the loss.

Home equity agreements are an attractive option for people who either don't qualify for traditional home equity financing or want to tap into their home equity without getting into debt. Here is our list of the top-rated shared equity agreements.