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In theory, a home equity line of credit (HELOC) is open to any homeowner who has built equity in their home. In practice, however, high monthly interest payments and other factors can prevent people from accessing the capital they need to make renovations or consolidate high-interest debt. Luckily, there’s a way around that. Point’s Home Equity Investment allows you to tap into your home’s equity with no monthly payments required. You simply pay back the loan, plus any appreciation in the home’s value, at any point over the 30-year term.
Helping Homeowners
The average homeowner has about $311,000 of equity built up in their home, according to CoreLogic. That equity, equal to a home’s value minus the remaining mortgage, can be a financial lifeline to homeowners needing a quick influx of cash. This is most commonly done through a HELOC, which provides people with a revolving line of credit they can use for any purpose.
Just like with a mortgage, homeowners need to qualify for a HELOC so there’s no guarantee you’ll get one, even if you have ample equity. On top of that, you’ll need to make payments on the loan even before the repayment period begins, and if you miss payments you could risk foreclosure.
The team behind Point witnessed this first-hand, and it inspired them to change the way homeowners look at home equity. Since starting in 2015, they’ve helped more than 10,000 homeowners and have provided more than $1 billion in home equity funding.
How it Works
The phrase “no monthly payments” is often a red flag for financial products, and usually has people searching for a catch. There’s no catch with Point. The company offers a Home Equity Investment (HEI), which is when they buy a portion of your home’s equity that you can buy back at any time during the 30-year term.
An HEI works similar to other investments in that Point makes money if your home’s value increases, and loses money if it decreases. Let’s say you receive a $30,000 HEI, and a few years later you’re ready to sell your house. After completing the sale, you’ll pay back that original investment plus a percentage of any appreciation in the home’s value.
If the home’s value decreases, your payback amount may even be less than what you received since Point shares in the depreciation.
There are some other fees involved, but not much. The largest expense will be paying for a home appraiser to confirm your home’s value, which can cost up to $600 depending on where you live.
Point charges a 3-5% transaction fee when depositing your funds into an account, though that’s deducted from the total amount so you won’t have to pay out of pocket. Similarly, you’ll pay around $75 in fees when repaying the investment.
Get to the Point
Point is dedicated to helping homeowners tap into their home equity when they need it, without worrying about monthly payments that could cost them their house. There are no income requirements, and they work with people with 500+ credit scores (most banks require a creditworthiness of 620 or higher).
It takes 60 seconds to see if you pre-qualify for a Home Equity Investment.