Selling Part Of Your Home Equity As A Possible Solution


LoanSafe Member
Nov 11, 2009
Many distressed borrowers who have equity in their homes simply choose to sell. This enables them to pay off their troubled mortgage and possible end up with enough money to make a start on buying another home.

But having equity doesn't always make selling a great option. For example, to put my home on the market, I'd have to put a lot of money (that I don't have) into repairs. Then there is the realtor's cut and all kinds of other selling fees to contend with. Though it may seem I've got a lot of equity, I think I'd end up with a big fat goose egg if I sold my house now.

I recently learned of another possible option for those in my situation. You sell a portion of your home equity (say, 10 - 25%) to an investor in return for cash now. When you sell the home, you pay back their investment, plus a percentage of any increase in market value. If, after a 10-year period (or at any other time), you decide you don't want to sell, you still pay them back their investment plus any increase in value during the period that they invested in the property. In the latter case, I'm thinking you could get a cash-out refinance to pay them back if you didn't have the cash.

There is a Bay Area company called Point that is set up to create these types of arrangements. I don't have all that much information on them (nor am I connected to them in any way), but I may look into this. I can see some potential not-so-good things about it, but none of my options at this point are without risk or pain. Given that the prices in my area are strongly increasing, it might be a way to get out of my current tough spot and not lose my home and equity, though I'd be giving a percentage of that equity to someone else.

Anyway, just thought I'd bring it up. It's an interesting idea.