{"id":20027,"date":"2026-02-06T10:41:07","date_gmt":"2026-02-06T10:41:07","guid":{"rendered":"https:\/\/diyhaven858.wasmer.app\/index.php\/what-is-a-home-equity-agreement-how-it-compares-with-a-heloc-or-home-equity-loan\/"},"modified":"2026-02-06T10:41:07","modified_gmt":"2026-02-06T10:41:07","slug":"what-is-a-home-equity-agreement-how-it-compares-with-a-heloc-or-home-equity-loan","status":"publish","type":"post","link":"https:\/\/diyhaven858.wasmer.app\/index.php\/what-is-a-home-equity-agreement-how-it-compares-with-a-heloc-or-home-equity-loan\/","title":{"rendered":"What is a home equity agreement? How it compares with a HELOC or home equity loan."},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Homeowners are sitting on record levels of home equity, but many are hesitant to tap into it with a cash-out refinance or a second mortgage. High mortgage rates have made borrowing more expensive, and adding another monthly payment can feel risky when budgets are already stretched. That tension has helped put home equity agreements on more homeowners&#8217; radars. These agreements promise cash without monthly payments, but they come with trade-offs.<!-- HTML_TAG_END --><\/p>\n<p> <iframe loading=\"lazy\" title=\"CDS Widget\" src=\"https:\/\/templates.cds.yahoo.com\/remote\/widget?campaignId=4ec2331a-fbb0-4230-81e2-d38f75a95135&amp;lineItemId=2c3f8d93-092f-4b0e-992c-9cf94bae30a6&amp;contentId=4f45eb69-8ea0-45d9-877b-cf58babb5bd2&amp;viewId=t7X9Z7-WBdYJWQWMh53O2w&amp;providerId=yahoo_personal_finance_397&amp;site=finance&amp;spaceId=1183300100&amp;commerceSiteId=us-finance-pnr\" scrolling=\"no\" height=\"480\" data-testid=\"iframe-with-resizer\" class=\"yf-16wd5dt\"><\/iframe> <\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->At its core, a home equity agreement (HEA) allows a homeowner to receive a lump-sum cash payment today in exchange for giving an investor a share of the home\u2019s future value. Instead of paying interest and making monthly payments, the homeowner settles the agreement later \u2014 typically when they sell the home, refinance, or reach the end of the agreement\u2019s term (usually 10 to 30 years, but more on this below).<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->\u201cFor decades, homeowners who needed to tap into their equity had only two real choices: Sell the house or take on more debt,\u201d said Jeff Glass, CEO and co-founder of the home equity agreement company Hometap. \u201cA home equity investment gives them a third option.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Home equity agreements are sometimes referred to as <em>shared appreciation agreements<\/em> or <em>home equity investments<\/em>. While the terminology varies, the structure is similar across most home equity agreement companies: Homeowners trade a portion of future equity for access to cash today.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Something else worth noting: You won\u2019t find HEAs with your typical mortgage lender. HEA companies specialize in these types of investments and work directly with you, the borrower, without a middleman. These firms include, but aren\u2019t limited to, companies like Hometap, Point, Unison, and Splitero. As with any mortgage product, you\u2019re encouraged to get quotes from several to compare terms.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->A home equity agreement typically begins with a home appraisal to determine the available equity. Based on that valuation, the investor offers a lump-sum payment. In exchange, the investor places a lien on the property and becomes entitled to a percentage of the home\u2019s future value.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Unlike a loan, there\u2019s no set interest rate and no required monthly payment. The amount owed at settlement depends on how much the home appreciates or depreciates and how long the homeowner keeps the agreement.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->\u201cIf the home\u2019s value goes down, what the homeowner owes goes down with it,\u201d Glass said.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Most home equity agreements sit junior to an existing mortgage, meaning homeowners don\u2019t have to refinance their mortgage or give up a low-rate mortgage they may already have.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->With an HEA, you can expect terms ranging from 10 to 30 years and up-front fees similar to other home equity lending options (more on those in a minute). The ultimate sum you\u2019ll pay to your HEA investor varies by company, but it\u2019s based on a proprietary rate set by the company and clearly stated in your HEA agreement.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->For example, say you and your HEA investor agree on a 10% rate and a 10-year term on a home worth $500,000. You\u2019ll receive a 10% payout up front ($50,000), and the investor gets 10% of the home\u2019s future value at the end of the term. Here\u2019s how the numbers will play out if you sell your home in 10 years for $700,000:<!-- HTML_TAG_END --><\/p>\n<ul class=\"yf-h8k6hx\">\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->$700,000 &#8211; original $500,000 = $200,000 in equity<!-- HTML_TAG_END --><\/p>\n<\/li>\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->$200,000 equity &#8211; $50,000 you initially borrowed = $150,000 in equity<!-- HTML_TAG_END --><\/p>\n<\/li>\n<li class=\"yf-h8k6hx\">\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->$150,000 &#8211; $70,000 (your investor\u2019s share of 10% of the home\u2019s value) = $80,000<!-- HTML_TAG_END --><\/p>\n<\/li>\n<\/ul>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->In this case, you would pocket $80,000 \u2014 before covering the costs of selling the home \u2014 and pay the HEA company the $50,000 you originally borrowed, plus their share of $70,000 for a total of $120,000.<!-- HTML_TAG_END --><\/p>\n<section class=\"up-next-container tw-block md:tw-hidden yf-1tgly48\">\n<header class=\"small  mb-4 yf-1kayatz font-condensed\"> <\/header>\n<\/section>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Home equity agreements are often compared with more familiar options like home equity lines of credit (HELOCs) and home equity loans, but the differences matter.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->A HELOC is a revolving line of credit with variable interest rates and required monthly payments. A home equity loan gives borrowers a lump sum of cash with a fixed rate and predictable monthly payments. Both increase a homeowner\u2019s debt load and typically appear on credit reports.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->A home equity agreement doesn\u2019t require monthly payments and generally isn\u2019t treated as traditional debt. That flexibility can appeal to homeowners who want to avoid stretching their monthly budget or disturbing their credit score, or who don\u2019t want to lose a low-rate primary mortgage.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->But all three products \u2014 HEAs, HELOCs, and HELs \u2014 share common closing costs. Typical costs, which generally range from 3% to 5% of your payout amount, include an appraisal, loan origination fees, escrow fees, title insurance and search fees, and recording fees.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->The biggest difference comes down to predictability. Home equity loans are the least flexible but offer the most certainty, while home equity agreements trade certainty for flexibility. Variable rates put HELOCs somewhere in the middle.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Supporters of home equity agreements claim they can be useful in certain situations, particularly for homeowners who are equity-rich but cash-constrained.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->According to Glass, Hometap\u2019s typical customer is a longtime homeowner with significant equity who needs access to capital without taking on another monthly obligation. Use cases can include paying off higher-interest debt, covering medical or family expenses, renovating a home, or funding opportunities like education or a small business.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->One of the biggest challenges with a home equity agreement is that the cost isn\u2019t obvious on day one. Without an interest rate or monthly payment, it can be difficult for homeowners to compare it directly with more familiar options like a HELOC or home equity loan.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->That uncertainty is often part of the appeal. But it\u2019s also why financial advisors encourage homeowners to look beyond the absence of monthly payments and focus on how the math can play out over time.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Consider a homeowner with a house worth $400,000 who wants to access $60,000 in equity.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->With a HELOC, assume the homeowner borrows $60,000 at an 8% interest rate with a two-year draw period and an eight-year repayment term. Payment during the draw period would be $400 per month, and during the repayment term, about $828 per month. The total repaid would be roughly $91,000, with about $31,000 of that being interest.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Now consider a home equity agreement. Instead of monthly payments, the homeowner receives $60,000 up front and agrees to share a portion of the home\u2019s future appreciation (say, 30%) with an investor. If the home appreciates from $400,000 to $550,000 over the same 10-year period and the agreement requires the investor to receive 30% of that gain, the appreciation share would be $45,000.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->That would put the settlement at roughly $105,000 ($60,000 borrowed + $45,000 share of equity), before any fees. And that $105,000? You\u2019ll generally pay it back in a lump sum at the end of the agreement term or when you sell or refinance your home. However, you can settle up early with some HEA companies and save on costs. Be sure to research repayment terms to avoid any uncertainty.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->The uncertainty of HEAs is what makes many financial advisors cautious.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->\u201cWhat I focus on is total cost over time, not whether there\u2019s a monthly payment,\u201d said Dave Petso, managing director and executive advisor at Modern Wealth Management. \u201cJust because there\u2019s no monthly payment doesn\u2019t mean it\u2019s cheaper. It usually means the cost is deferred and magnified.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Home equity agreement companies say they work to make those trade-offs clear.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Glass said Hometap walks homeowners through multiple scenarios before they sign, showing how different home price changes and timelines could affect what they owe. The company also provides ongoing visibility into estimated settlement amounts through an online dashboard.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Home equity agreements aren\u2019t regulated in the same way as traditional mortgages. Oversight varies by state, and protections often depend on the contract itself.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Glass said Hometap supports clearer regulation and industry standards and is working with regulators to develop appropriate frameworks.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->For homeowners who are uncomfortable with monthly payments but hesitant to give up future equity, advisors often suggest exploring other options first.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Those alternatives may include traditional home equity loans, smaller HELOCs, or waiting until borrowing conditions improve.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Another option? The cash-out refinance. While this option could force you to trade a low mortgage rate for a higher one, it could give you access to the cash you need with a fixed monthly payment. And depending on your financial situation, you may even be able to avoid stretching your loan term out, which keeps you on track for a similar payoff date to your current mortgage.<!-- HTML_TAG_END --><\/p>\n<p> <iframe loading=\"lazy\" title=\"CDS Widget\" src=\"https:\/\/templates.cds.yahoo.com\/remote\/widget?campaignId=4ec2331a-fbb0-4230-81e2-d38f75a95135&amp;lineItemId=2c3f8d93-092f-4b0e-992c-9cf94bae30a6&amp;contentId=4f45eb69-8ea0-45d9-877b-cf58babb5bd2&amp;viewId=t7X9Z7-WBdYJWQWMh53O2w&amp;providerId=yahoo_personal_finance_397&amp;site=finance&amp;spaceId=1183300100&amp;commerceSiteId=us-finance-pnr\" scrolling=\"no\" height=\"480\" data-testid=\"iframe-with-resizer\" class=\"yf-16wd5dt\"><\/iframe> <\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->A home equity agreement can make sense for some homeowners, but it isn\u2019t a one-size-fits-all solution. It may appeal to people who need cash but want to avoid monthly payments or taking on more debt. The trade-off is giving up a share of future home value, which can be costly if prices rise. Comparing it carefully with a HELOC or home equity loan is key.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Yes. Home equity agreements are typically paid back when you sell your home, refinance, or reach the end of the agreement term. Some agreements also allow homeowners to buy out the investor earlier, though the cost depends on the home\u2019s value at that time. Because repayment usually happens as a lump sum, it\u2019s important to understand how timing and appreciation affect what you\u2019ll owe.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START -->Home equity agreements generally don\u2019t affect your credit score the same way loans do because they aren\u2019t structured as traditional debt and don\u2019t require monthly payments. That said, the agreement places a lien on your home, which can affect future borrowing or refinancing. Failing to stick to the contract terms can also create financial complications, even if your credit score isn\u2019t directly affected.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-vbsvxt\"><!-- HTML_TAG_START --><em>Laura Grace Tarpley<\/em><em> edited this article.<\/em><!-- HTML_TAG_END --><\/p>\n<\/p><\/div>\n<p><br \/>\n<br \/><a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Homeowners are sitting on record levels of home equity, but many are hesitant to tap into it with a cash-out refinance or a second mortgage. High mortgage rates have made borrowing more expensive, and adding another monthly payment can feel risky when budgets are already stretched. That tension has helped put home equity agreements on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20028,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[10],"tags":[2410,2409,2411,1005,396,253],"class_list":["post-20027","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news","tag-agreement","tag-equity-agreement","tag-hea","tag-home-equity","tag-home-equity-loan","tag-monthly-payment"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/diyhaven858.wasmer.app\/wp-content\/uploads\/2026\/02\/2d3554b0-2ce8-11f0-bebf-fafede66915c.jpeg","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/posts\/20027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/comments?post=20027"}],"version-history":[{"count":0,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/posts\/20027\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/media\/20028"}],"wp:attachment":[{"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/media?parent=20027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/categories?post=20027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/diyhaven858.wasmer.app\/index.php\/wp-json\/wp\/v2\/tags?post=20027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}