With real estate prices rising, homeowners may be looking for ways to tap into their equity. But HELOCs and other loans require monthly payments that can tighten cash flow for homeowners who prefer not to make the payments.
Home equity sharing agreements allow homeowners to circumvent these requirements. With these arrangements, a third party can buy part of your equity. You now get the money and they get a share of the sales when you sell. As long as house prices keep rising, everyone wins.
HomePace is one of the innovative companies that offers share-sharing agreements in six different states. Here’s how the company works.
HomePace “co-invests” up to 15% of your home’s value. Use a HomePace investment instead of a HELOC or down payment loan. Don’t pay up to 15 years.
What is HomePace?
HomePace is a home equity investment company. HomePace is located in Park City Utah and “co-invests” with homeowners in six different states (Washington, Arizona, Utah, Colorado, North Carolina, Tennessee). It allows homebuyers and homeowners to sell part of their home without moving. HomePace gives the homeowner cash and does not collect payments for 15 years or when the homeowner sells.
HomePace raises money for home equity investments through institutional investors such as pensions and hedge funds. These institutional investors are seeking exposure to the US real estate market and can gain that exposure through HomePace.
What does it offer?
HomePace offers “co-investment” opportunities for homeowners looking for instant cash. When a homeowner partners with HomePace, they receive a lump sum of cash that can be used in any way they wish. In return, HomePace gets a portion of the equity in the home. It will be paid back when you sell the house or in 15 years, whichever is sooner.
These are some of the key features of a HomePace co-investment.
Up to $250,000
HomePace buys up to 15% of your home’s fund for a maximum of $250,000. Homeowners can use this money as a down payment on their home, to pay off debt, or to do just about anything they want.
No monthly payments
House prices have risen sharply in the past two years. But homeowners can’t easily take advantage of their newfound wealth. HELOCs and refinancing mortgages require monthly loan payments. HomePace solves that problem by directly buying equity. Homeowners don’t pay HomePace until they sell their home or after 15 years.
Maintain your position as a homeowner
When HomePace buys a share of the equity, it becomes a secondary lien on the property. However, you retain your position as a homeowner.
No cash costs
HomePace charges a 3 to 4% startup fee that is deducted from the money the homeowner receives. Because it is deducted from the original funds, homeowners never pay the cost out of pocket.
Good credit required
While HomePace doesn’t require monthly payments, it checks homeowners’ credit scores. Homeowners must have a credit score of 630 to qualify for a HomePace home equity investment.
Only available in limited states
Currently, HomePace offers investments in:
HomePace invests strategically in areas of the country that are experiencing rapid growth. If you live in one of those states, you may be eligible for share-sharing. But there are other requirements.
Are there any costs?
People who receive an investment from HomePace pay no out-of-pocket costs and no interest is charged. But the HomePace investments are not free money.
When a homeowner takes on HomePace as a co-investor, they “pay” HomePace a start-up fee of 3 to 4%. HomePace deducts the fee from the money the homeowner receives so that homeowners never feel that payment. However, it would mean that if you received a $250,000 co-investment, in reality you would only get $242,500 in your bank account (that’s a 3%).
In addition, homeowners must pay HomePace back when they sell their home (or after 15 years). When selling, HomePace receives a fixed percentage of the proceeds from the sale of your home. The proportion stays the same whether your home is growing or falling.
How does HomePace compare?
HomePace is a company in the growing equity sharing space. The 15-year term is slightly longer than the standard 10-year term. However, it is not as long as Unison’s 30-year term. It has reasonable credit requirements, but Point may be a better alternative for those with bad credit. In addition, the small number of states in which HomePace operates is the fewest of any current competitors in the market.
One advantage HomePace has over most of its competitors is its buyout flexibility. Typically, homeowners can buy out the investor anytime within 15 years. Homeowners who receive a cash windfall can choose to buy back their equity so they can stay in the house or buy back the future benefit.
Check out how HomePace compares to this list of HELOC alternatives.
How do I open an account?
Request a free quote from HomePace to see if you qualify for an equity sharing agreement. Eligible people must submit a complete application, including a credit check and a full appraisal of their home.
Homeowners who want to move forward will receive a full cost agreement with the exact terms of the agreement. Homeowners can choose to withdraw at any time until they sign the agreement.
Is it safe and secure?
HomePace uses escrow accounts, title deeds and other standard real estate processes to partner with investors. HomePace is not exposed to data breaches and has the infrastructure to securely communicate with potential customers.
That said, real estate transactions always seem to attract scammers looking to make money. Homeowners should never email personal information to HomePace during the application process. In particular, they are not allowed to email bank details or social security numbers. Instead, they must use secure web portals where information is encrypted.
How do I contact HomePace?
HomePace is headquartered in Park City, Utah. The company allows potential homeowners to request a quote directly through its website. Those with questions may also contact HomePace by email at email@example.com or by phone at (919) 737-7637.
Is it worth it?
HomePace can be a good option for homeowners who expect to move in a decade or less. If you’ve found your forever home, it might not make sense to hire HomePace as an equity investor. It is an investment product designed with a maximum time horizon of 15 years.
Home equity investments are a relatively new concept. Homeowners who do not actively build wealth outside their primary residence may accidentally sell a large portion of their only valuable asset. As a result, they could become poorer in the long run.
A HomePace investment can be strategic. It can enable you to get the money for a rental home or other long-term investment. But it’s also possible to sell your equity alone to spend on one-time experiences like vacations or depreciating assets like cars or other vehicles. People considering this or any other form of equity sharing should be very careful before signing up. It is not free money, and it should be treated as a loan, even if it has no monthly payments.
Up to 15% of the total value of your homeMaximum investment of $250,000
Maximum Loan-to-Value Ratio (LTV)
Maximum Debt Income Ratio (DTI)
Mon-Fri, 8am-5pm (MST)
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