For those who’re thinking about getting a home equity loan but are getting nowhere due to income requirements or a low credit rating, it’s possible you’ll want to contemplate a house equity investment instead. While traditional home equity loans use your private home as collateral as a way to issue you a loan you pay back in installments, a house equity investment takes partial ownership of your private home’s equity and issues you a lump sum that doesn’t should be paid back in monthly installments.

One company that provides home equity investments is Point. Keep reading to learn more about how a Point home equity investment works and why it might or is probably not the suitable selection for you.

Best home equity offering with no income requirement

Unlike most home equity loans, there is no such thing as a income requirement to qualify for Point’s home equity investment offering. This makes it a possible solution when you need money but cannot qualify for a conventional home equity loan or cash-out refinance.

Point home equity pros and cons

Pros explained

No monthly repayments

A Point home equity investment (HEI) is different from a conventional home equity loan or home equity line of credit (HELOC). With a conventional home equity loan, you borrow against your private home’s equity and make monthly loan repayments to repay the debt. With an HEI, you get money in exchange for giving up a portion of your private home’s equity, or the difference between your private home’s current value and the mortgage balance. In consequence, you don’t should make any repayments for everything of your 30-year agreement with Point, which suggests you will not must worry about additional expenses on top of your mortgage payments during that point.

Once you receive your lump sum from Point, you may sign into an agreement that Point is entitled to a portion of your private home’s equity at the top of the 30 years or once you decide to sell your private home, whichever comes first. In other words, Point will either receive a portion of the sale of your private home or be entitled to a repayment from you. It’s also possible to resolve to exit the partnership before the complete term and buy back the equity depending on the worth of your private home on the time.

No income requirements

Point doesn’t have any income requirements for its HEI product. Conversely to qualify for a HELOC or home equity loan you will need to point out stable, sufficient income as evidence you’ll have the opportunity to satisfy the repayment terms.

Moreover, while getting a HELOC or home equity loan with weak credit is difficult, it’s far more likely with an HEI. Point’s minimum credit rating requirement is 500, generally it’s around 650 to 680 for home equity loans and HELOCs.

Because Point doesn’t technically loan you money — moderately, it purchases a portion of your private home’s equity — an HEI with Point won’t impact your credit rating or your debt-to-income ratio.

Ability to purchase back your equity

You keep the suitable to purchase back your private home’s equity from Point even when you’re not selling your private home. Because of this in case your financial situation improves, you possibly can exit the equity-sharing agreement early.

Nevertheless, the worth of your private home will affect how much you are required to pay back to Point. If your private home’s value has increased, you can be expected to offer Point a share of that gain. If your private home has depreciated in value, Point also shares in that loss, and you may find yourself paying lower than the initial lump sum you received.

Cons explained

You give up a portion of the equity of your private home

With a Point home equity investment, you’re signing over a portion of your private home’s equity. Because of this you may not have the opportunity to take full advantage of your private home’s value if it appreciates.

With a conventional home equity loan, you receive a lump sum of money, but you continue to retain complete ownership of the equity of your private home. While Point is not going to be added as an owner on the title of your private home, you may be signing into an equity-sharing agreement. In consequence, in case your property value rises, Point will share in your additional equity. Thus you may find yourself paying greater than what you initially received as your money lump sum depending on the terms of your agreement.

Lower appraisal value of your private home

Once you apply for Point’s equity funding, Point will appraise the worth of your private home. Nevertheless, it should mechanically lower your private home’s appraisal by 20% to 25%. That signifies that when Point assesses what share of your private home’s equity it’s entitled to, the general total value of your private home is judged lower than what it might otherwise be price. This risk-adjusted value safeguards Point against fluctuations out there.

Point home equity offerings

Currently HEIs are the one financial product offered by Point, but the corporate is taking waiting list applications for its SEED down payment investment. Point doesn’t offer home equity loans or HELOCs.

Home equity investment

Point’s home equity investment product offers you a lump sum of money in exchange for a portion of your private home’s equity. A Point representative will determine the equity percentage you may owe based in your specific situation. Unless you select to sell your private home or buy your equity back from Point before the top of your contract, you’ll have 30 years before Point collects its share.

SEED down payment investment

While they are not currently available, Point will soon offer SEED down payment investments. These investments are much like the Point home equity investment but are geared toward recent homebuyers. With a SEED investment, Point helps to fund your initial down payment in exchange for a portion of your private home’s equity. It’s identical to the HEI, except Point helps you fund your down payment moderately than investing in a house you already own.

Nevertheless, as with the Point HEI, fastidiously consider the terms to which you are agreeing. While there are several benefits to with the ability to put down a bigger down payment, ultimately you’re signing away a slice of your private home’s equity, which you would come to regret should your private home radically appreciate in value.

Point has not yet definitively stated when it should launch the SEED program.

Point home equity pricing

Because Point’s home equity investment is not a conventional loan, you will not be accountable for fixed or variable rate of interest payments. Nevertheless, there are some fees related to the HEI program. Among the commonest fees Point charges include:

• A $45 fee for documents when Point releases its claim on the property
• A $30 fee when Point prepares a payoff demand statement
• A $250 fee when any changes are made to the title of the property
• A $500-$800 fee for the appraisal as a part of your closing costs
• $500-$3,500 in administrative fees should the owner default

You will also pay a 3.9% processing fee on the lump sum you receive upfront from Point, with a $1,000 minimum, in addition to other third party closing costs.

Point home equity financial stability

Point has received a rating of B1 from Moody’s. Because of this the corporate is not considered financially stable and will present high credit risks.

Point home equity accessibility

Availability

Point is out there to homeowners in Washington, D.C., and the next 26 states:

• Arizona
• California
• Colorado
• Connecticut
• Florida
• Georgia
• Hawaii
• Illinois
• Indiana
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Latest Jersey
• Latest York
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• South Carolina
• Tennessee
• Utah
• Virginia
• Washington
• Wisconsin

Contact information

To get in contact with a Point representative, you possibly can call the corporate’s customer support at 1-(888) 764-6823 from Monday through Thursday, 6 a.m. to six p.m. or Friday, 6 a.m. to 4 p.m. It’s also possible to fill out a customer inquiry form on Point’s website and wait for a customer support rep to be in contact.

User experience

In keeping with online reviews, Point’s services are easily accessible online.

You may fill out a web based application to qualify for pre-approval and apply for an HEI. As well as, you’ll find articles about how HEIs work and the way they differ from home equity loans and HELOCs on Point’s website.

Point home equity customer satisfaction

Point currently has a 4.28 out of 5 stars for customer satisfaction on the BBB website. The BBB has also given Point an A+ rating. Nearly all of customers claim to have had good experiences with the corporate — many praise the workers who assisted them throughout the application process. Nevertheless, several reviewers of Point complained that customers felt like they needed to leap through hoops after they attempted to purchase Indicate before the top of their 30-year term.

How we evaluated Point home equity investments

In evaluating Point home equity, we examined the next aspects:

• Applicant requirements
• Terms and rates
• Value and payment considerations compared to more traditional home equity loans
• Customer reviews

Summary of Money’s Point home equity review

Giving up a portion of the equity in your private home in exchange for a lump sum payment may be useful, especially when you need an influx of money but wish to avoid monthly repayments or don’t qualify for traditional home equity loans. Nevertheless, unlike conventional home equity products, a Point HEI requires you to give up a portion of your private home’s equity, with a reduced appraisal value of your property besides.