Hometap Equity Partners Review

Hometap Equity Partners is offered by Hometap, a financial services company founded in 2017 and based in Boston, MA. Hometap Equity Partners is available in 12 states across the USA.

Key takeaways

• Maximum investment of $300,000. Your actual offer will depend on the value of the home and how much equity you have in the property.
• You must settle the investment within 10 years. Once the contract term ends you'll need to return the entire investment. Take this into account if you plan to stay in your home for longer than 10 years.
• Share of the home's value. Unlike most shared equity investors, Hometap Equity Partners does not take a percentage of a home's appreciation. Instead, it gets paid a 5% to 25% share of the home's value when the contract ends.
• Equity cash-out. Hometap Equity Partners allows homeowners to access up to 15% of the property's value without taking on debt. However, it cannot be used toward the down payment of the property that secures it.
• Only available in select states. Hometap Equity Partners is only available in 12 states.
• Fair credit accepted. If you have a credit score of 620 or higher, you may qualify for a shared equity agreement with Hometap Equity Partners.

Hometap Equity Partners Pros and Cons:

How does the Hometap Equity Partners product work?

A shared equity agreement (also called a shared appreciation agreement or shared equity contract) is essentially a way to sell a small fraction of the equity in your home to an investment company.

As a home equity loan alternative, the Hometap Equity Partners product allows you to tap into the equity in your home without the monthly payments that come from a traditional home equity loan or line of credit. This product primarily targets the home-equity-rich who are in need of cash for reasons such as a home improvement project or to eliminate debt.

The transaction is secured like a loan but you won't be paying Hometap a monthly loan payment with interest. Instead, if your home goes up in value, Hometap share in the gain; if it goes down, they share in the loss.

How much will Hometap invest into a shared equity agreement?

The Hometap Equity Partners program offers equity investments that range from 5% up to 15% of a property's market value. As you might expect, Hometap has a cap on the amount of funding they will invest in a single home. For the Hometap Equity Partners program, the most Hometap can invest in a single home is $300,000.

While Hometap Equity Partners is not a loan product, the maximum "loan to value" rate is 75%. That means their investment in the property cannot exceed 75% of its market value. Let's say you own a property with a current market value of $100k, but you still owe $20k on your mortgage. Your equity would be $80k. In this scenario, if you have good credit, you may qualify for a shared equity investment of up to $55k.

What are the costs associated with Hometap Equity Partners?

Unlike loans, the costs associated with shared equity investments are not based on an interest rate. There are no monthly payments or accrued interest. Instead, Hometap shares in the change in value of your property. If your property value goes up, Hometap gets a share. If the value drops, Hometap shares in the losses. They only get their money back when you sell your home – and they typically only make a profit if you also make a profit.

At the time your home is sold -- or when the term of the investment is up -- Hometap will receive the agreed-upon percentage of the sale price or current appraised value, which can range from 5% up to 25%.

The Hometap Equity Partners program includes a closing fee that ranges from 1%, up to 5% of their investment. The Hometap Equity Partners program includes an origination fee equal to 3% of their investment.

What are the terms for a shared equity investment via Hometap?

You can use the funds provided by Hometap Equity Partners for up to 10 years. After 10 years, you will need to either sell your home or buy them out.

To buy Hometap out, you would need to pay back their agreed-upon equity stake in your home, which is based on the total value of your home at the time of settlement.

How long does it take to close a deal with Hometap?

Hometap Equity Partners will typically fund a deal within 31 days.

What types of property does Hometap consider?

Shared equity investors often have restrictions on the type of properties they will invest in. Hometap Equity Partners will consider shared equity agreements secured by the following property types:

• Primary home
• Investment properties.