There are always new options out on the market! Which is very exciting for new and current homeowners. A home equity investment (or known as an equity sharing agreement) basically allows you to sell equity that you have on your home. Your earnings are an upfront cash payment. Keep in mind that this is not a loan. You are making an agreement with an investment company to obtain cash for what you have earned from home equity. This is very different than someone who may refinance their home or take out a second mortgage.
One of the main appeals is that you are not getting into any further debt. Like if you did a cash-out refinance, you would technically be getting into further debt. (Even if you were able to afford it, this is still what you are doing.) Another appealing point of view is that you have no extra monthly payments. The amount you owe to the investor depends on how much your property value increases or decreases. Typically, you have ten years to repay, unless you sell or refinance your home earlier than ten years.
If the value of your home increases, keep in mind that you will be responsible to pay that much more back.
Understanding how home equity investments work can be cumbersome and confusing. Because of that, we would highly recommend you speak with a professional to make sure you are understanding how the investment works. A professional will be able to help ensure that you are eligible for this type of investment.
Also, like any other decisions you make, we would recommend you get offers from multiple investment companies instead of just one. There may be one company that offers something that the other one does not. It is also important to verify that there would be no type of penalties with your mortgage lender for obtaining this type of agreement.