When it comes to utilizing a wealth of built-up equity, homeowners have an array of options available on the market. Aside from reverse mortgages — both federally backed and proprietary — many shared equity products and sale leaseback products have popped up in recent months, each with their own features, fees, and structures. RMD gathered details for each product for a comparison snapshot.
EasyKnock ‘Sell-and-Stay’
Product type: Sale leaseback
Details: EasyKnock purchases a home for its full market value and gives customers up to 75% of the value minus existing mortgage payoff, costs and fees. The remaining percentage remains with the house in the form of an option, which is included in the lease language.
Fees and costs: 2 to 3% of the market value plus closing costs, which are comparable to a typical purchase or sales transaction based on the property value; 5% fee on the funding amount in the event of buyback
Rent amount, if applicable: Based on size, value, funding amount, taxes, and insurance, and area’s current market rents.
Maximum CLTV: 55%
Taxes and insurance: EasyKnock pays taxes and insurance, which are calculated into the monthly rent
Available for under 62 years old: Yes
Buyback or sale details: The homeowner-turned-tenant has the option to terminate their lease at any point or repurchase their home within five years of the initial lease agreement. For buyback, homeowner pays the EasyKnock funding amount (which includes loan proceeds and outstanding mortgage payoff) plus 5% fee of the funded amount. To sell, the customer can exercise a sell and move option, and will then receive the remaining equity and any appreciation in value.
States available: Texas, Florida, Georgia, Tennessee, and South Carolina, with more expected soon.
Irene ‘Safe Stay’ and ‘Safe Leaseback’
Product Type: Sale Leaseback and Sell-and-stay
Safe Stay details: Irene buys the house at full market value, and the customer receives 20% to 60% of the home’s value minus a fee and retains a life estate. The amount they receive depends on the operating costs of the property (taxes, insurance and maintenance), and the age of the seller. The funding amount will go toward paying off any existing mortgage, so this option is for homeowners with little-to-no mortgage balance.
Safe Stay fees and costs: Upfront fee of 3%; potential various costs if buyback occurs or occupant leaves.
Safe Leaseback details: Irene purchases the home for the full market value. The customer received 90% upfront, and 10% goes into a trust to cover rent payments. Lease terms are 2 to 3% with the option of extension.
Safe Leaseback fees and costs: 2% fee is charged at closing; potential various costs if buyback occurs or occupant leaves.
Rent amount, if applicable: Rent price is based upon fair market value. Irene will pay more if the occupant chooses to leave.
Maximum CLTV: Varies
Taxes and insurance: Irene pays for taxes and insurance for both products
Buyback or sell: Under the Safe Stay option, Irene receives the house when the homeowner dies. Both solutions give the option to end the contract, and leave the property early for an extra consideration, which is agreed upon upfront
States available: New Jersey, with more expected.
Point
Product Type: Shared equity
Details: Point will buy up to 20% of the home’s value — up to a maximum of $1 million. The homeowner receives this funding amount minus costs. Point’s product has a 10-year term, and they have begun piloting a 30-year product, as well. When determining home’s value, Point currently factors in a 10-20% risk adjustment. So the risk-adjusted home value on a $400,000 valued home would be $340,000, assuming a 15% adjustment. Point shares in any appreciation of the home at the end of loan term, when the owner sells, or during a buyback.
Fees and costs: Processing fee of 3 to 5% of the funded amount; appraisal fee (averaged between $500 and $700); and escrow fees (averaged between $450 and $650)
Rent details, if applicable: N/A
Maximum CLTV: 80%
Available for under 62 years old: Yes
Taxes and insurance: Homeowner is responsible for both
Buyout or sale details: Buyback or sale price calculated is based upon the funding amount and a portion of appreciation — which is determined with Point’s “proprietary risk-based model.” Homeowner pays a $45 reconveyance fee on top, although other costs may apply, such as a charge for changing the title or fees for new required appraisals.
Other details: Homeowner remains exclusive owner of the property, but a lien typically in the form of a deed of trust or equivalent is recorded against the property to protect Point’s interest. To be eligible for Point, the homeowner must retain at least 20% of the home’s equity after Point invests.
States available: California, Oregon, Washington, Massachusetts, Colorado, and Georgia, with more states on the way.
Unison HomeOwner
Product type: Shared equity
Details: Unison can provide a homeowner with up to 20% of a home’s value minus fees, with a 30-year term maximum term.
Fees and costs: Fee of 3.9% of funding amount at opening. No fees associated with future buyback or sale.
Rent details, if applicable: N/A
Maximum CLTV: 70%
Available for under 62 years old: Yes
Taxes and insurance: Homeowner is responsible for both
Buyback or sale details: For a sale: when the 30-year term limit is reached, Unison receives the initial investment, plus or minus its share of future changes in value. Their percentage of any gain or loss is set at the beginning of the agreement. There are no new fees and the homeowner can sell at any time.
A buyout can occur without selling after a minimum of 3 years. Unison will not share in any decrease in value in the event of a buyout. Unison’s proceeds will be calculated by looking at the current appraised value of the home at that time from an independent third party appraiser. No additional fees are required.
Other details: The homeowner remains the sole owner, but Unison would be recorded with the home’s county in a 2nd lien position to the mortgage. Unison will not share in decrease in value if the home is sold or bought back within 3 years.
States available: Currently available in 23 states with more on the way.
Figure Home Equity Loan
Product Type: HELOC alternative
Details: For borrowers looking for between $15,000 and $100,000, these loans are fixed-rate, lump sum draws. Loan terms are available for 5, 7,10, and 15 years.
Fees and costs: origination fee of 1 to 3% of the initial draw amount, based on loan term, CLTV, state in which your property is located, and credit score. Fixed monthly costs, with APR ranging between 5.49% and 11.25%
Rent details, if applicable: N/A
Maximum CLTV: 80%
Available for under 62 years old: Yes
Taxes and insurance: Homeowner is responsible for both
Buyback or sale options: N/A
Other details: The loan process is completely online with possible same-day approval and funding within 5 days.
States available: Available in at least 25 states, with more to come.
Figure Home Advantage
Product Type: Sale leaseback
Details: Figure buys the home and grants the seller(s) a lease that renews annually. Homeowners get their proceeds in one lump sum.
Fees and costs: No origination fees. Fixed monthly costs in the form of rent payments via the lease agreement.
Rent details, if applicable: Minimum of one-year lease.
Maximum CLTV: No set maximum allowable CLTV. Figure says best results are seen with homeowners who have a low mortgage balance or own their home outright, as this yields the highest value out of their property when sold.
Available for under 62 years old: Yes
Taxes and insurance: Figure pays for both.
Buyback or sale options: Occupant can remain in the home as long as rent payments are made, and are not in default under the lease. Minimum 1-year lease required.
Other details: Minimum credit score is 680. The financials are recommended by Figure for homeowners with little mortgage debt (0-30%).
States available: Georgia, Ohio, Texas, Florida, Pennsylvania, Arizona and Nevada. Figure hopes to spread to forty additional “markets” by the end of 2019.
Written by Maggie Callahan, additional reporting by Chris Clow
