5 Best Home Equity Sharing Companies (November 2021) | LendEDU lendedu.com
Home equity sharing agreements let you sell your home equity to investors. In return, you receive the cash you need without taking on debt.
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Downsides
You could miss out on growth if home prices go up significantly in your area. You won’t fully benefit if your home appreciates because the investment company owns some of the equity.
You could end up paying more than with a traditional home equity loan. This is likely to happen if property values rise.
You need sufficient equity in your home. You usually can’t enter into an equity sharing agreement if you have a large amount of existing debt on your home.
Your equity may be undervalued. Some lenders make a risk adjustment to the value of your home to protect their investment. This means you may not get the full value of your home’s equity.
You’ll have to pay appraisal fees. Typically, the investing company will require you to get the fair market value of your home estimated by a licensed appraiser before they offer a final investment amount.