Shared Equity Agreements For Dummies In Ohio
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Home equity sharing agreements involve selling a percentage of your home's value or appreciation to an investor in exchange for a lump sum upfront. The agreement typically is settled, with the homeowner paying back the investor, after the home is sold or at the end of a 10- to 30-year period.
A HEA might make more sense if you need a lump sum now, prefer not to take on monthly debt, or have limited income or credit history. Both can be smart ways to tap into your home's equity. Just make sure to read the fine print, weigh the long-term costs, and choose the option that best aligns with your plans.
Cons You give up a portion of your home's future appreciation. Not available in all states. Only by select private lenders. May include upfront fees. Limits how much equity you can access. May include restrictions on how you can use, renovate, or sell your home.
While a Home Equity Investment is not the right fit for all homeowners looking to tap into their equity, it might be a good fit for you if: You can't – or don't want to – make a monthly payment. Your income or credit disqualifies you from traditional financing solutions.
Home equity sharing may also be wise if you don't want extra debt reflected on your credit profile. "These agreements allow homeowners to access their home equity without incurring additional debt," says Michael Crute, a real estate agent and operations strategist with Keller Williams in Atlanta.
Qualifying for a HEA is relatively easy, too. The main requirement is to have built up some equity in your property. You don't need a super high credit score, and the income criteria are flexible.
Qualifying for a HEA is relatively easy, too. The main requirement is to have built up some equity in your property. You don't need a super high credit score, and the income criteria are flexible.
Draft the equity agreement, detailing the company's capital structure, the number of shares to be offered, the rights of the shareholders, and other details. Consult legal and financial advisors to ensure that the equity agreement is in line with all applicable laws and regulations.
