A Home Equity Agreement is a contract with a third-party investor. You receive cash today in exchange for a share of your home's future value or future appreciation. Like a Home Equity Investment, it is not a loan and typically carries no monthly payment.
The investor takes a defined share of the home, often expressed as a percentage of value or a percentage of appreciation. When the agreement ends through a sale, refinance, or buyout, you pay back the original advance plus the agreed share.
HEAs appeal to homeowners with significant equity but limited income for traditional loan qualification, or to homeowners who specifically want to avoid adding a monthly payment.
Effective cost depends entirely on what your home does over the term. In strong markets, the investor's share can become expensive relative to a traditional loan. Terms, fees, buyout formulas, and exit conditions vary by company. Read carefully.
Mortgage Today is an educational brand and does not originate, broker, or fund loans of any kind, including Home Equity Agreements. Inquiries are forwarded to a licensed loan officer in our network. The information above is provided for education only. For a side-by-side comparison against a HELOC, home equity loan, or cash-out refinance, book a call below.
Related glossary terms
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Both let you tap home equity. The right tool depends on what you need the money for, how long you need it, and what your current first mortgage looks like.
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