|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.
|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.
|Percentage Share of Home Appreciation||10% - 45%|
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
|Investment Range %||10% - 15%|
|Investment Range $||Up to $150K|
|Credit Score Range||
550 - 850
|Immigration Status Considered||
|Employment Statuses Considered||
|Supported Income Types||
|Shared Equity Use Case||
|Verification Documents Required||