Your home’s equity is one of the most powerful financial tools at your disposal. But what if you don’t have good enough credit for a home equity loan or home equity line of credit? In this case, you might still qualify for a home equity agreement.
What if you’re not sure what a home equity agreement is or how to use it? Read on to learn more about these unique financial strategies.
Put very simply, a home equity sharing agreement means that an investor takes out a minority ownership stake in your property based on the property value. For example, if you’ve built up to 50% equity in your property, you can find an investor to invest in 20% of that equity.
Why do companies do this?
In short, it's because they expect your property's equity or value to appreciate and become even more valuable over time. In a home equity agreement, the investor gets to take home the profits from that equity since you'll pay them back for the equity they originally "purchased."
Compared to other options, like a cash-out refinance, a home equity investment enables you to dip into the value of your home for:
However, a home equity agreement is highly dependent on the fair market value of your property. It’s a flexible real estate tool, but home appreciation can affect just how much money you may receive from an investor or mortgage lender.
A home equity agreement usually works like this:
This is the best way to understand a home equity agreement. It’s a tool for you to get cash for a share of your home equity.
Like other refinancing tools, such as reverse mortgages and similar financial products, you need to understand how this hometap works. If you already have a personal loan or a high-interest mortgage loan for your existing mortgage, home equity products like this may not be ideal for your financial goals.
Balance offers a unique home equity agreement through co-ownership.
Balance invests in your home in exchange for an ownership interest in the home — your mortgage will be replaced by an equity investment from us, and you’ll make a monthly payment to us to cover your occupancy of the home as well as your share of insurance and taxes.
In the meantime, you can use the financial wiggle room to pay off debts, save up, and make necessary repairs to your home. Co-owning with Balance can provide you with the flexibility you need to keep your home without compromising your credit.
In the future, you can save up enough money to buy us out and refinance into a traditional mortgage.
If no other options are suitable for your situation, co-owning with Balance may be the ideal way to access your home’s equity.
Co-owning with Balance has some major advantages for homeowners. These benefits include:
With Balance, you get to stay in your home — and you gain financial freedom and flexibility to help you pay down other debts. Best of all, you can always buy us out and purchase the equity we invest in later on. Contact us today to learn more.