So you are a homeowner and need money – maybe a lot of money. Many of us are in the same boat these days.
If you've owned your house for a while, it probably has gained in value. You may want to use the value of your home to get cash – but you're not thrilled by the prospect of having to make monthly payments for a home loan or home loan line. Or you don't qualify for one.
However, there is a new option that you may not have heard of – a home investment.
What is it you ask A company called Hometap invests in your home and gives you a lump sum in return for part of its future value.
Best of all, since you don't take out a loan, you don't have to worry about the burden of monthly payments. Instead, When you finally sell your home or settle your investment, the company gets its share of the proceeds.
Tap the value of your home (without selling or taking out a loan).
Here is a simplified version of how it works:
Let's say you own a house that is currently valued at $ 250,000. If Hometap agrees to pay you a 10% stake in your home, you will receive 10% of the home value within four days of the close (after deducting 3% of the closing fees). Homeowners can request an investment of up to 30% of the home value or $ 300,000, depending on their financial goals.
Just like a home loan, you can do whatever you want with the money – pay your bills, renovate your house, pay off debts, fix your roof, start your own business, or go back to school.
Sometime in the next decade you will sell your house. Let's say you sell it for $ 300,000. Hometap receives an agreed percentage of the new house value.
So what happens when the value of your home goes down instead of going up? Since they invest in addition to the homeowner, Hometap also participates in the depreciation.
"If the value doesn't go up and we earn less, we'll do less," the company says on its website. "That's the risk we're taking, and Hometap has to worry, not you."
A few things to consider
Interested? Here are a few things to consider:
- You need at least 25% equity in your home. In order for Hometap to invest in your home, you must first have equity. Home equity is the current market value of your home less your debt. If you make your mortgage payment every month and the value of your home increases, you will build up equity.
- Hometap invests in your home for a maximum of 10 years. If you haven't sold your home by then, there are other ways to repay Hometap – with your savings, by refinancing your mortgage, or by taking out a home loan or personal loan. How much would you owe Hometap? It depends on what percentage of your home the company is involved in and how much your home is worth at that time.
- You pay a 3% service fee that covers things like ownership, fiduciary and valuation costs. These closing costs are deducted from the total investment dollars, so you have no expenses.
- Hometap currently operates in California, Florida, Maryland, Massachusetts, New York, North Carolina, Oregon and Virginia. It is working to be available to homeowners in Michigan, Arizona, Minnesota, Illinois and New Jersey and plans to expand to other states in the country.
- Hometap also invests in single-family homes or condominiums. Hometap does not invest in holiday homes because the homeowner has to live in the residence for more than half a year.
So you get your money in just three weeks
The entire Hometap process is designed to be as easy as possible for you. You have money in hand in just three weeks from start to finish. After you have completed the investment, your funds will be transferred within four days.
First, request a quick online investment quote so that the company can determine whether this is suitable for you and your property. Then a Hometap investment manager will guide you through the rest and answer any questions you may have. Hometap will ensure that an external expert comes out and determines the value of your house. You don't have to do anything.
As soon as everything is done and signed, you will receive your money within four days. Easy. Best of all, you don't have to worry about monthly payments or accrued interest because it's not a loan. .
If you are wealthy but have little money – and many of us are right now – check if this is a good option for you.
Mike Brassfield ((email protected)) is a senior writer at The Penny Hoarder. He is a homeowner and needs more and more money.
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