What is Shared Equity?

Shared equity

Shared equity or home equity investments are agreements formed between a homeowner and an investor. The agreement is formed so the homeowner can pull equity out of their home without going into debt. It’s quite simple. An investor or co-owner will give a homeowner a lump sum of money in exchange for partial ownership of their home and its future value. Just think of the things you can do with all that cash? You could remodel the house, pay off credit cards, use the money for college. 

The choice is up to you, because this lump sum is not to be paid back until after the home is sold or the homeowner decides to pay back the sum without selling. Whatever choice is made, shared equity is a new way of getting equity out of your home without breaking the bank. The reason you won’t break the bank is simple: a shared equity investment allows a homeowner or first-time home buyer the chance to share their home’s equity in exchange for a one-time-only cash payment from an investor. 

Doing this allows you to liquidate part of your equity in the form of a cash payment or for a down payment. One thing you can count on is that you, the homeowner, will not be spending any money when dealing with a shared equity investor. In fact, you will be getting money. A lump sum of money, to be exact. Because shared equity is just that… it’s sharing the equity in your home with someone else, or in this case, sharing it with an investor. What that means is that you don’t pay back this lump sum because whatever you use it for~ adding a room, adding another garage, adding a second floor, putting in a pool and jacuzzi, tearing down a wall. Whatever home improvement you decide on, the co-investor will now join in reaping the benefits of this transformation. In other words, if you’ve used the lump sum to beautify your home, the investor will now share in this addition. 

However, that does mean that when you pay back the initial lump sum, and let’s say your home went up in value, you will have to pay a percentage of that increase. But that’s still better than trying to get a home equity loan, because shared equity is NOT a loan. Something else that’s exciting about this new type of homeownership is that it doesn’t affect your credit. In fact, you can have bad credit and still be able to take part in sharing your property with an investor. How many times have you been turned down because your credit wasn’t perfect. Shared equity investments are literally for anyone and everyone. Now, hold on because there’s more great news. 

The homeowner does not have to pay off the investor with any monthly payments or monthly interest rates. Hard to believe? Well, open your eyes and read on. The reason the homeowner doesn’t have to pay back the investor like they would have to pay back a lender after borrowing equity, is that at the end of the contract, the homeowner has already agreed to pay the investor’s initial investment (the lump sum) as well as a fixed percentage rate, due to the change in the home’s value. Now, if the home depreciates after a certain amount of time, that’s even less for the homeowner to have to repay. Remember, the homeowner doesn’t have to sell the home at the end. They can decide to pay back the investor the original amount they borrowed.

If they do decide to sell, however, the investor will be paid back with the money received in the sell. In addition, there are no hidden fees with shared equity. You borrow on your own equity and pay back the same amount, plus or minus a percentage fee. After all, homes will go up and sometimes down in value, but if the home is kept in good condition, its value will increase. A shared equity investment contract is set for approximately 10 to 30 years or when the home is finally sold. If the homeowner doesn’t want to sell their home, they have every opportunity to buy out the investor at any time. (No hard feelings, we promise). Now, why would an investor want to be a part of someone else’s homeownership? It’s really quite simple. 

The investor is taking a small risk in joining with a homeowner in order to make a real estate investment that can offer them tax benefits. Imagine taking a small risk to invest in real estate that will most likely result in you receiving tax kudos? If you’re an experienced investor, why wouldn’t you jump at this chance? Ok, now let’s get back to shared equity and what it can do for you. Let’s say you don’t own a home, but you want to (who doesn’t?), but you can’t afford it. Well, now you can if you take part in shared equity. 

Your dream of being a homeowner will no longer be just a dream. Just imagine being able to purchase a home with little or no money down by simply sharing the cost of ownership. This type of co-owning a property is new in the U.S., but it is catching on quickly because it encourages those who wouldn’t normally purchase a home to go out a buy one. It’s great for places where the cost of homeownership is extraordinary, like Los Angeles and New York. Just imagine a world where people are no longer foreclosed upon because they can’t afford their mortgage? What a wonderful world that would be. Instead of watching your home be auctioned off to the highest bidder, you would remain in your home because part of the ownership is now in the hands of the investor. 

Remember, the investor wants you to remain in your home because, whatever ups and downs you experience with your home, the investor is along for the ride. If your home’s value increases, that benefits the co-owner or co-investor, so it’s essential that you remain in your home. However, it’s important that you maintain the upkeep of your home as well. Whether you use the lump sum the investor will give you to add to your home, or you use it to pay down bills, the home must be kept clean and livable because you are now sharing the value of your home with someone else (don’t worry, the investor is not planning on moving in). Let’s look at why sharing equity is a good idea. It does not add any debt, or interest, or even monthly payments. Never! Shared equity considers not just single-family homes but townhomes and even condominiums. That’s great news, especially for today, where townhomes and condos are being built everywhere. Lastly, there is the flexible 30-year term or longer, if needed, repayment period. Imagine what you can do with your equity once it has been turned into cash. It almost boggles the mind. 

Here at AxSharedEquity.com, we are so excited to help you find an investor who wants to share in your equity. Dear customer, visit us at our website and type in your zip code and phone number, and we’ll do the rest. What do we mean by that? We mean that once your information is in our database, we are able to find you an investor who wants to invest in your home’s equity. We’re able to find you the perfect match based on your location. It’s that easy. Now our company, AxSharedEquity.com, isn’t an investor or lender. Once we find you an investor, our work is done. We’re the company that you go to in order to find the right investor. We have a large database that holds the names and numbers of those who are willing to take part in shared equity. This new type of homeownership is becoming very popular because there is no debt. 

You will receive a cash value that is equal to your equity, and it’s that same amount of money that you pay back either by selling your home or paying the investor over time. The point is, this cash can be used for anything. So, grab your phone or computer, visit us at AxSharedEquity.com and begin your journey toward homeownership through shared equity. 

© 2021 AxSharedEquity, All Rights Reserved