The Best Shared Equity Alternatives to a Reverse Mortgage

In some cases, reverse mortgages are the best option available to homeowners. For instance, if you are over 62, own your home outright (or close enough), and you need money for daily expenses, a reverse mortgage could a be a good choice. However, getting a reverse mortgage is not a decision you want to take lightly. Choosing the right lender is important. SuperMoney's reverse mortgage comparison tools can help you compare lenders.

In some cases, reverse mortgages are the best option available to homeowners. For instance, if you are over 62, own your home outright (or close enough), and you need money for daily expenses, a reverse mortgage could a be a good choice. However, getting a reverse mortgage is not a decision you want to take lightly. Choosing the right lender is important. SuperMoney's reverse mortgage comparison tools can help you compare lenders.

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.

A reverse mortgage can be a good option if you meet the age requirement, own your home outright, and don't have any better way to raise money to pay for daily expenses. However, a shared equity alternative may be a better alternative if you have a high debt-to-income ratio, can't afford additional monthly payments, or don't meet the eligebility requirements of a reverse mortgage. Note that reverse mortgages require you to first use the money you receive to pay off your mortgage. You can then keep whatever is left.

Shared equity agreements, also known as home equity investments, are not technically loans. They won't increase your debt, don't charge interest and there aren't any monthly payments to worry about. They are also relatively easy to qualiy for. For instance, you can qualify for a shared equity agreement even if you have a high debt-to-income ratio and a modest loan-to-value ratio.

A shared equity agreement can be a good option if you:

Shared equity agreements are an attractive product for homeowners who want to avoid additional monthly payments and have an immediate need for cash.

Reverse mortgages and shared equity agreements have their advantages and drawbacks. The best choice for you will depend on what your financial circumstances and objectives are. 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 home equity loan.

If you think a home equity investment may be a good choice for you, get quotes from all the home equity investors listed above.

It only takes a couple of minutes to find out if you prequalify and discover how much you can get for a share in your home's equity. There are no strings attached, and it won't hurt your credit score. You may be surprised by how well they compare to reverse mortgages, home equity lines of credit, and other traditional home equity financing options.