Equity Choice - Get Rid of Monthly Payments

FAQs

What is EquityChoice?

EquityChoice is a smart alternative to traditional home equity loans or co-investments that allows homeowners access access to cash without a monthly payment, allowing them to pay off debt, make home upgrades, improve their business, and more.

EquityChoice is a subordinate lien that allows customers to keep their primary mortgage terms intact and preserve the equity they’ve already built. We share in the outcome of the home price appreciation that occurs after you close on your EquityChoice loan, not before.

It gives borrowers the choice of receiving cash from their equity at a below market interest rate, while sharing in a portion of the home’s future appreciation as determined by an Index, without having to liquidate portfolio investments, dip into savings, or experience the pressure of adding additional monthly mortgage payments. Like other mortgages, you are still required to pay property taxes, homeowner’s insurance, and maintain the home.

How does EquityChoice work?

EquityChoice provides homeowners immediate access of up to 16% of their current home’s equity in cash – with loans up to $500,000 – in exchange for a fixed interest rate that compounds monthly for the term of the loan, plus a share in the home’s future appreciation. The shared appreciation amount may increase the effective annual percentage rate and overall cost of your loan.

How much shared appreciation will I owe?

EquityChoice is a variable rate, 2nd lien mortgage that requires no monthly payments and allows you to keep your low-rate 1st lien in place. It features:

    - A low 4.5% fixed rate (4.839% APR), plus a share of future home price appreciation proportionate to the amount you borrow
    - Due in single balloon payment in (10) years with the freedom to prepay
    - An Interest Cap based on State and Federal limits that protects you in periods of rapid home price appreciation

The effective rate on EquityChoice varies with home price appreciation but is always subject to the Interest Cap:

    – If homes generally depreciate, your effective rate will be 4.5%.
    – If homes appreciate at 2% annually your effective rate will be 8.68%.
    – If homes appreciate at 4% annually, your effective rate would be 11.56%

How does EquityChoice offer no monthly mortgage payments?

It’s simple. We designed EquityChoice by starting with you in mind: the homeowner. Our investment is long-term, on behalf of retirement plans and life insurance policy holders who don’t need or want access to their capital in the interim. We prefer that our money remains invested as long as possible. We offer EquityChoice to allow select customers, who are financially sound and responsible homeowners, access to capital without a fixed payment schedule.

What are the eligibility requirements for EquityChoice?

While this is not meant to be a pre-qualification, at a minimum you must:

    - Be a homeowner with an existing first lien mortgage
    - Reside in the property as your primary residence for at least 2 years
    - Have sufficient equity, approximately 50% or greater, built in your home
    - Access to liquid reserves, assets, or income to satisfy the loan requirements
    - Have a FICO credit score of 680+

While the above is not a commitment to lend and is subject to change, it provides the minimum eligibility criteria when you are ready to apply for an EquityChoice loan.

When does EquityChoice become due and payable?

The loan matures and must be repaid when you sell your home, after the specified term, whichever happens first or upon the occurrence of certain other events as defined in your promissory note. When the loan matures, you are required to make a final payment representing the total amount owed under the mortgage.

What other costs can I expect to pay?

You can expect to pay an origination fee that is approximately 3% of the loan amount at closing and customary closing costs associated with a mortgage transaction. These costs can be financed into the loan. The out-of-pocket expenses you can expect to pay are for an appraisal and a property inspection, which are third-party fees and not lender costs.

Why EquityChoice instead of other equity share or co-investment products?

As a shared appreciation residential mortgage, EquityChoice provides homeowners greater safeguards and potentially lower costs than equity sharing agreements. Like all other mortgage products, it is regulated and can only be originated by a licensed loan officer making it more predictable, secure, and controlled to protect all parties involved (the borrower, broker and lender).

As a mortgage, we must abide by standard loan terms and lender obligations that are regulated by state and federal authorities, unlike other home equity sharing products. EquityChoice also protects the homeowner in the event your home depreciates at time of maturity. If the home is worth less than the Initial Agreed Value at payoff, you will not owe us any Shared Appreciation amount. In that event, you would owe the negatively amortizing fixed interest rate component that has been accruing for the term of the loan at a rate that was set below the market of other subordinate lien mortgage products at the time we closed your loan. If your home decreases in value, that presents a cost to us but not necessarily a loss to you.

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