The Best Shared Equity Alternatives to a Cash-Out Mortgage Refinance
April 2024
A shared equity agreement, also known as a home equity investment, is a debt-free way for homeowners to tap into their home equity without monthly payments or interest.
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Are you interested in cashing out some of your home equity with a mortgage refinance? To qualify, most lenders require a credit score of at least 620 and a debt to income ratio no higher than 36%.
Shared equity agreements are much more flexible, requiring a credit score as low as 500. How? Well, instead of lending you money, shared equity investors give you cash for a slice of your home equity. This means easier qualification, no additional debt, and no monthly payments.
We recommend you apply with the following investors and see which one offers the best terms. It is free and won't hurt your credit.
How do cash-out refinances compare to shared equity agreements?
A cash-out refinance is a smart option if you can qualify for a mortgage with lower interest rates. If you can't lower your rates, other options, such as a shared equity agreement, may be a better alternative. That way, you will avoid paying higher interest rates on a bigger mortgage.
Shared equity finance agreement are not technically loans or mortgages. They don't increase your debt and there are no monthly payments. Typically, it is easier to qualify for a shared equity agreement than a mortgage. For instance, home equity investors will consider homeowners with a high debt-to-income ratio and they usually have a high maximum loan-to-value ratio.
A shared equity agreement can be a good option if you
- need cash but don't want a monthly payment
- have high-interest debt to pay off
- need to finance a home improvement or want to start a business
The cost of a shared equity agreement will depend on the value of your home when either the contract ends or you sell the property. The repayment will include the initial amount you received plus a share in the home's appreciation since you entered the agreement.
What are the pros and cons of shared equity agreements?
Both cash-out mortgage refinances and shared equity agreements have their advantages and drawbacks. The best option for you will depend on your goals and financial circumstances. Here is a list of the pros and cons to keep in mind if you're considering a shared equity agreement as an alternative to a cash-out refinance.
How do I get started?
If you think a shared equity agreement may be a good option for you, fill out a free application form with all the equity investors listed above. It will only take a few minutes to see if you prequalify and to discover which investors offers the best terms. There are no strings attached and it won't hurt your credit score.
I am looking for a cash-out refinance, where can I get one?
A cash-out refinance can be a great option if you have good credit and a low debt-to-income ratio. You can even save money on your current mortgage if you can lower your interest rates. These lenders provide competitive rates and terms.
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