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Patch Homes Equity Sharing

in Shared Equity Agreements from Patch Homes

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Patch Homes Equity Sharing

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in Shared Equity Agreements from Patch Homes

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Highlights
Highlights
Community Rating Strongly recommended
Investment Range % 10% - 15%
Investment Range $ Up to $150,000
Share of Home Appreciation 10% - 45%
Shared Equity Use Case Equity Cash-Out

Patch Homes Equity Sharing Review

Where is the Patch Homes Equity Sharing product available?

Patch Homes is a financial services company based in San Francisco, CA. It was founded in 2016 and offers shared equity appreciation contracts to qualified applicants in 2 states across the USA.

How does the Patch Homes Equity Sharing 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. The two primary use cases are to help finance a mortgage down payment and secondly, as a way to extract equity/cash out of your home.

As a home equity loan alternative, the Patch Homes Equity Sharing 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 Patch Homes a monthly loan payment with interest. Instead, if your home goes up in value, Patch Homes share in the gain; if it goes down, they share in the loss.

How much will Patch Homes Equity Sharing invest into a shared equity agreement?

The Patch Homes Equity Sharing program offers equity investments that range from 10% up to 15% of a property's market value. As you might expect, Patch Homes has a cap on the amount of funding they will invest in a single home. For the Patch Homes Equity Sharing program, the most Patch Homes can invest in a single home is $150,000.

While Patch Homes Equity Sharing 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.

Patch Homes Equity Sharing Terms & Requirements
Investment Term Amount
Equity Investment Range 10% - 15%
Maximum Equity Investment $150,000
Maximum Debt-to-Income Ratio 75%
Maximum Loan to Value Ratio 75%

What are the costs associated with Patch Homes Equity Sharing?

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, Patch Homes shares in the change in value of your property. If your property value goes up, Patch Homes gets a share. If the value drops, Patch Homes 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.

Under the Patch Homes Equity Sharing program, at the time your home is sold Patch Homes will recieve an amount that ranges from 10%, up to 45% of any appreciation or depreciation in the home’s price.

The Patch Homes Equity Sharing program includes an origination fee equal to 3% of their investment.

Patch Homes Equity Sharing Costs
Fee Amount
Percentage Share of Home Appreciation 10% - 45%
Origination Fee 3%

What are the terms for a shared equity investment via Patch Homes Equity Sharing?

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

To buy Patch Homes out, you would need to pay back their original investment plus or minus their share of your home’s change in value.

What types of property does Patch Homes Equity Sharing consider?

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

  • Primary home
Pros & Cons of Patch Homes Equity Sharing
Pros Cons
  • No monthly payments for the duration of the agreement (up to 10 years).
  • No added debt and no interest charges.
  • Pay back the loan out of the sale price if you sell your house within 10 years.
  • If your home depreciates, you will repay less than you borrowed. Financing costs only come with increased equity.
  • A HELOC may be cheaper if you have great credit and a large income.
  • The cash amounts are lower than what is typically available with a HELOC or home equity loan.
  • Borrowers who don’t sell or refinance within 10 years will owe the entire loan amount plus a percentage of the appreciation in one lump sum.
  • If you refinance the lump sum, you may pay financing costs twice.
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    Contact

    • Headquarters
    •   730 Commercial Street
      San Francisco, CA 94108 USA
    •   Visit Site

    Message from Patch Homes

    Patch Homes is a payment free alternative to home equity loans and HELOCs. It offers a partnership based financing model that allows homeowners to access their untapped home equity wealth. Homeowners receive funds at 0% interest and with no monthly payments, in exchange for sharing the future upside/downside of the homes' value.

    About Patch Homes Equity Sharing

    Availability

    Alaska Alabama Arkansas Arizona California Colorado Connecticut Washington, D.C. Delaware Florida Georgia Hawaii Iowa Idaho Illinois Indiana Kansas Kentucky Louisiana Massachusetts Maryland Maine Michigan Minnesota Missouri Mississippi Montana North Carolina North Dakota Nebraska New Hampshire New Jersey New Mexico Nevada New York Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Virginia Vermont Washington Wisconsin West Virginia Wyoming
      Available in 2 states
    • California
    • Washington

    Feature Breakdown

    Origination Fee 3%
    Investment Range % 10% - 15%
    Investment Range $ Up to $150K
    Minimum Age 18
    Credit Score Range 550 - 850
    Immigration Status Considered
    • U.S. Citizen
    • Non-Resident
    Employment Statuses Considered
    • Employed Full-Time
    • Employed Part-Time
    • Other
    • Retired
    • Self-Employed
    • Unemployed
    Intended Use
    • Primary Home
    Maximum LTV 75%
    Military Status
    • Active Duty Military
    • Military Dependent
    • Non-Military
    • Veterans
    Supported Income Types
    • 1099 Misc. Income
    • Cash
    • Direct Deposit (W2, SSA, SSDI)
    • Payroll Check or Prepaid Card
    • Tax Returns
    Shared Equity Use Case
    • Equity Cash-Out
    Verification Documents Required
    • Proof of Identity
    • Proof of Income
    • Social Security Number
    • Proof of citizenship/residence (Green Card)

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