Michigan Equity Share Agreement

State:
Multi-State
Control #:
US-00036DR
Format:
Word; 
Rich Text
Instant download

Description

In equity sharing both parties benefit from the relationship. Equity sharing, also known as housing equity partnership (HEP), gives a person the opportunity to purchase a home even if he cannot afford a mortgage on the whole of the current value. Often the remaining share is held by the house builder, property owner or a housing association. Both parties receive tax benefits. Another advantage is the return on investment for the investor, while for the occupier a home becomes readily available even when funds are insufficient.


This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.

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FAQ

Shared equity agreements can be faster and easier to obtain than traditional equity financing, but they can be more onerous to pay off and reduce your proceeds from a home sale.

A shared equity finance agreement allows multiple parties to go in on the purchase of a property, splitting the equity ownership ingly. This type of arrangement is often structured when one party on their own cannot afford to purchase a home?for instance, when a parent helps an adult child.

A home equity loan could be a good idea if you use the funds to make home improvements or consolidate debt with a lower interest rate. However, a home equity loan is a bad idea if it will overburden your finances or only serves to shift debt around.

Entering into a home equity agreement can provide a homeowner with several benefits, such as: No monthly payments or interest charges. ... Lenient minimum credit score requirements. ... Flexibility in how you can use the funds. ... Consequences of a lump sum payment. ... It can get expensive depending on your home's amount of appreciation.

Home Equity Loan Disadvantages Higher Interest Rate Than a HELOC: Home equity loans tend to have a higher interest rate than home equity lines of credit, so you may pay more interest over the life of the loan. Your Home Will Be Used As Collateral: Failure to make on-time monthly payments will hurt your credit score.

Con: You'll likely pay much more than you get By signing away a percentage of your future appreciation, you could be paying the company far more for the upfront cash than what you would pay a lender for a HELOC or home equity loan.

Repay the loan: While you won't be required to make monthly payments, you will need to repay your initial loan, plus any additional agreed-upon percentage of appreciation, at the end of your agreement's term ? generally 10 to 30 years.

Make sure you check with your lender before you decide to pay off your loan early. Typically you won't face a prepayment penalty for contributing a small amount above the required monthly payments, but you should read your loan agreement carefully and discuss the terms with your lender before making a decision.

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Michigan Equity Share Agreement