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Hometap Review
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Hometap offers home equity investments as an alternative to conventional home equity loans and HELOCs. Hometap invests alongside you, so that you can access your equity without additional debt or monthly payments.
The process is simple, straightforward, and transparent. When you settle your investment, Hometap receives a previously agreed upon percentage portion of your home’s future value as payment for its investment. The investment can be settled by refinancing, through a cash buyout, or by selling the home.
Because Hometap is an investor, not a lender, you don’t have to deal with monthly payments. Instead, once you’re approved, you can receive cash in as little as three weeks to use it however you’d like.
Hometap works for homeowners who want a fast, flexible, and transparent way to access their home’s equity. Since Hometap doesn’t require monthly payments, it’s ideal for people who need money sooner rather than later. You don’t make any payments until you settle your investment within the 10-year effective period.
Hometap only offers home equity investments. However, it makes these investments flexible and easy for homeowners to qualify for through its application process.
Hometap will invest up to 25% of your home’s current value in exchange for a percentage of its future value. You’ll get a cash lump sum, and you won’t have to pay it back until you settle the investment.
Throughout the Hometap Investment process, you’ll be paired with a dedicated Investment Manager who will walk you through each step and answer any questions you may have along the way.
Hometap has one of the quickest and easiest application processes available for home equity investments. The application process is quick, and once approved, you can receive funding in as little as three weeks.
To apply for a Hometap investment, follow these steps:
There are no monthly payments to worry about with a Hometap Investment. Hometap does charge a fee equal to 4.5% of the investment amount that covers the arrangement and funding of the investment. There are no other Hometap fees, however, the appraisal and other third party costs associated with the signing (i.e.: escrow, attorney/notary, and document recording) are deducted from the investment amount when you get your money.
So that there are no hidden fees or surprises, you’ll receive a detailed estimate after you submit an application, including all of the final costs of obtaining the investment.
The effective period for a Hometap investment is 10 years, and you settle it all at once, the same way you received it. The amount you repay is linked to your home’s value when you submit payment. If the property appreciates, the cost may be higher, and vice versa. The percentage of the home’s value Hometap receives doesn’t change—it’s just a higher total amount if the value of the home is higher.
Many homeowners typically take out 10% of their home value at the start of the Investment.
This means those homeowners would owe between 15% to 20% of their final home value at the time of settlement, depending on how long they hold the Investment.
Hometap caps its investment return in the event of high appreciation to protect homeowner's. If you were to take out an Investment equal to 10% of your current home value, and then settle in:
If your home’s value goes down: Hometap’s share remains at 15%, no matter when you pay.
Hometap investment managers are available Monday through Thursday from 8:00 a.m. to 8:00 p.m., and Friday from 8:00 a.m. to 5:00 p.m. In addition to contacting them directly, you can find more information on their Homeowners’ Resources page, which provides guides, videos, and other content to help you understand how a home equity investment can help you.
You can also use Hometap’s online form to send an inquiry, and they will get back to you as soon as possible.
Hometap can be an excellent option for many homeowners who don’t want the stress of monthly payments that come with a loan. With this investor, you only pay back the loan when you settle or sell your home.
Hometap offers plenty of educational content for homeowners considering taking an investment. Despite its lengthy approval process and many fees, this company offers the advantage of less hassle for your money.
How is a Hometap investment different from a HELOC?
A home equity line of credit (HELOC) lets you use your home’s equity when you need to borrow money. Hometap invests in your home based on the amount of equity you’ve already built from paying off your mortgage. Unlike HELOCs, you don’t need to worry about monthly payments with a Hometap investment.
What if my home’s value goes down after ten years?
If your home’s value decreases, Hometap shares the loss.
What happens if I can’t settle the investment?
One of the risks that comes with a Hometap investment is not being able to pay back the investment when the time comes to settle If you don’t think you’ll be able to settle your investment through a refinance or buyout with savings and plan to stay in your home long term, a Hometap investment might not be the best fit.
Will a Hometap investment affect my credit score?
Because Hometap is not a lender, an investment does not impact DTI ratios as a conventional loan may.
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