What is a Home Equity Agreement?

A home equity agreement is a modern financial tool that allows homeowners to access cash based on the equity they’ve built in their property, without taking on debt or monthly payments. Instead of borrowing money like with a traditional loan or HELOC, you're selling a share of your home’s future value to an investor.

This arrangement is gaining popularity among homeowners who are house-rich but cash-strapped. Whether you’re facing a financial emergency, funding a renovation, or diversifying your investments, a home equity agreement can offer a flexible alternative, if you understand how it works.

How Does a Home Equity Agreement Work?

In a home equity agreement, a company gives you a lump-sum cash payment today in exchange for a percentage of your home’s future value. You don’t make monthly payments or pay interest. Instead, when you sell your home or reach the end of the term (often 10–30 years), the company gets its agreed share of the appreciated (or depreciated) home value.

Example:
Let’s say your home is valued at $500,000. A home equity agreement company offers you $50,000 upfront in exchange for 15% of your home’s future value. If you sell your home 10 years later for $600,000, the company receives $90,000 (15% of the sale price), and you keep the rest.

Purpose of a Home Equity Agreement

• Access liquidity without debt

• Avoid monthly payments and interest

• Fund renovations, emergencies, or investments

• Diversify wealth beyond real estate

• Delay selling your home while still extracting value

Home Equity Agreement Pros and Cons

Who Needs a Home Equity Agreement?

A home equity agreement is ideal for:

• Homeowners aged 55+ who want cash without downsizing

• People with low credit scores or inconsistent income

• Self-employed professionals needing liquidity

• Investors wanting to unlock capital from real estate

• Individuals with high home value but low savings

When is it used?

• Before a big renovation

• To fund tuition or medical expenses

• To consolidate high-interest debt

• When preparing to sell in a few years

Example of a Home Equity Agreement

Home Value: $400,000
Agreement Amount: $40,000 (10% of home value)
Term: 10 years
Investor Share: 16% of future value
If Home Sells at $500,000:
Investor receives $80,000 (16% of $500K)
You keep $420,000 minus selling costs.

Home Equity Agreement Template (Simplified)

Homeowner: [Your Name]

Investor: [Company Name]

Property Address: [Full Address]

Current Appraised Value: $X

Initial Investment Amount: $Y

Investor Share of Future Value: Z%

Agreement Term: X years

Trigger Events: Sale, Refinance, Term Expiry

Homeowner Obligations: Maintain property, keep taxes current, notify before sale

Fees (if any): Origination, closing, appraisal

Date Signed: [Date]

How is a Home Equity Agreement Made?

1. Application
   Submit details about your home, mortgage status, and personal finances.

2. Home Appraisal
   The company appraises your property to determine your available equity.

3. Offer & Terms
   You receive a lump-sum cash offer and sign a contract detailing the investor’s share.

4. Closing
   Once signed, you receive the funds, usually within a few weeks.

5. End of Agreement
   Triggered by sale, refinance, or end of term, at which point the investor is paid.

Home Equity Agreement Companies

Some well-known home equity agreement companies in the U.S. include:

• Unison

• Point

• Hometap

• Unlock Technologies

• EquiFi

Each has different fee structures, maximum amounts, term lengths, and eligibility criteria.

Conclusion

A home equity agreement can be a powerful tool to unlock the value of your home, without taking on new debt. However, it’s essential to fully understand the terms, trade-offs, and long-term implications. For homeowners not planning to move soon, it offers a flexible, low-risk way to get capital, while sharing in future upside (or downside) with an investor.

Sharing financial documents with multiple parties? Keep them secure.
Whether it’s a home equity agreement, mortgage, or legal files, Plox helps you share documents securely with analytics, watermarking, and access control.