Hometap Equity Partners

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 14 states across the USA.

• 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.
• Large investments available. Hometap Equity Partners will invest up to $600,000 in a home, which is more than what most shared equity companies offer.
• 10-year term. The investment has a contract term of 10 years, at which time you'll need to settle up with Hometap. You can do so by paying them in cash, getting cash-out refinancing, selling your home, or partnering with Hometap for another term.
• Share of the home's future value. Hometap Equity Partners gets paid a 5% to 25% share of the home's value when the contract ends. The specific percentage is based on how much cash you receive up front.
• Cash-out only. Existing homeowners can access up to 15% of their property's value without taking on debt. Funds can be used for anything, from paying off debt, renovating or retirement.
• Only available in select states. Hometap Equity Partners is currently available in 14 states.

How does the Hometap Equity Partners product work?

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

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 is designed for homeowners who need cash for reasons such as home improvement project or to eliminate debt.

Hometap Equity Partners will have a lien on the property (just like a mortgage does), but since it's not a loan you won't be paying Hometap Equity Partners interest or a monthly payment. Instead Hometap Equity Partners gets paid a share of your home's value when the contract ends, which typically occurs when you decide to sell your home or buy Hometap Equity Partners out. For example, Hometap Equity Partners might provide you with a cash investment today equal to 10% of your home's current value in exchange for 16% of your home's future value when you sell.

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. The most Hometap can invest in a single home is $600,000.

While Hometap Equity Partners is not a loan product, the maximum "loan to value" percentage is 75%. That means the value of their investment in the property plus any existing mortgage balance cannot exceed 75% of its market value.

What are the costs associated with Hometap Equity Partners?

Unlike loans, the cost associated with an Hometap investment is not based on an interest rate. There are no monthly payments or accrued interest. Instead, Hometap shares in the future value of your property and typically only receives a return on its investment when you sell your home or decide to buy Hometap out. The percentage of your home’s value that Hometap shares when the contract ends is larger than the percentage of Hometap's investment in your home. Therefore, Hometap will make a profit if your home’s value does not change. If your home’s value increases, Hometap will make a larger profit. If the value drops, Hometap will make a smaller profit, or might incur a loss.

The Hometap Equity Partners program includes an origination fee equal to 3% of the Unlock investment. This will reduce the amount of cash that you receive at closing. There are also expenses that are typical for any real estate financing transaction, such as appraisal, inspection and closing costs.

Unlock’s profit on its investment is subject to an annualized cost limit (typically 18%), Your cost for the Unlock money can never exceed the limit. In many cases, and depending on how long the contract remains outstanding, the cost will be significantly lower.

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 settle up with Hometap, either by selling the home or buying Hometap out. You can finance a buyout with your cash, refinancing your mortgage, or by partnering with Hometap for another term.

The amount payable to Hometap when you settle up equals their agreed-upon percentage share of your home's value 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
• Secondary homes and vacation properties.
• Investment properties.