“Find a need and fill it,” said Henry Kaiser, a foremost single and multi-family developer during the mid-20thC. Some sales-back lease companies and homeownership investors “have found” a need for debt-free, equity access and are now determined to fill that need.
And now there are, in fact, a number of “shared equity” alternatives to enable homeowners to tap into their home equity without having to tap into a home equity loan or line of credit. Here are some of these shared equity alternatives:
Unison Home Ownership Investors
- Unison is a long-time leader in homeownership development.
- Unison invests 5%-20% of the home’s value and then offers that percentage to the homeowners in cash.
- The homeowners retain full ownership of the house and can renovate or sell the house at any time.
- The deal comes of age in 30 years and Unison takes a cut of the home’s appreciation within that time period. Typically that appreciation is close to 35%.
- Alternatively, the homeowner can repay Unison its investment after 3 years.
- This California-based company typically invests 10%-15
- % of the home value in exchange for sharing in the home’s future appreciation.
- The homeowner has the option of buying back the home within 10 years without having to pay any interest or having to pay monthly payments in the interim.
- Provides up to 20% of home equity in cash for a 10-year term in order to share in the home’s appreciation.
- If the home value declines during the term of the deal, HomeTap shares in the losses.
- Pending a multi-state rollout, the company currently operates in Massachusetts and California.
Equifi’s Equity Funding Instrument
- This instrument is not yet fully formed but its focus is on accessing equity in cash in exchange for a portion of the home’s value when the homeowner sells, prepays or passes away.
- Launching in California, this instrument is set to rollout in 16 states.
- This sale-lease-back company buys a house, hands over the equity in cash and then rents the house back to the homeowner for as long as she/he wants.
- The homeowner can renew the lease annually and then buy back the house when ready or decide to move on from the house.
- This shared equity alternative is looking to collaborate with HELOC lenders and reverse mortgage instruments.
- CEO Jared Kessler said, “We’re focused on helping people who are getting turned down…our goal is to become the destination for people who want to turn around their lives…”
- Figure uses block chain and AI to provide consumer credit options.
- Homeowners can borrow from $15,000 to $100,000 with loan terms ranging from 5-15 years.
- Annual percentage ranges begin at 5.99%.
- Offered as an alternative to reverse mortgages, Figure is led by the former founder of SoFi and CEO Mike Cagney
- A strong selling point with Figure is that homeowners can apply in 5 minutes and be funded in 5 days.