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Is EquityChoice Right For Me?

Let’s explore the possibility of EquityChoice

EquityChoice could be a viable solution for you if you have:

  • lived in your home for at least two years,
  • good credit history, a FICO score of 680 or above,
  • sufficient equity of at least 50% loan-to-value (LTV),
  • an existing low-interest mortgage that you intend to keep in place,
  • the desire to maintain your current cash flow without the pressure of additional monthly payments,
  • access to reserves or investments that you want to preserve instead of liquidating.

Let’s look at an illustrated example of how EquityChoice could work

You own a home worth $1,000,000 and would like access to $100,000 in immediate funds.With EquityChoice, you’ll access funds and have no monthly payments for 10 years. At maturity, you’ll owe the principal, fixed interest (4.5% compounded monthly) + Shared Appreciation.

Let’s look at what your equity position would be and how much you would owe at the end of your EquityChoice (excluding what you might still owe on your primary 1st lien) loan term depending on various housing market outcomes using the example scenario provided.

Understanding the Equity Position

Let’s say the Index value of homes in your region depreciates by 2% annually and is worth $817,073 when it’s time to pay off the loan. You’ll owe $156,757 and you’ll still have $660,316 in home equity remaining.

Now, let’s assume the Index value of homes in your region doesn’t change, you’ll only owe $171,757. The $15,000 in Shared Appreciation you’ll owe equates to the difference between the Future Index Value and the Initial Agreed Value. $1,000,000 – $950,000 = $50,000 *30% = $15,000. Furthermore, you will still have $828,243 in home equity.

Let’s say the Index value of homes in your region increases by 2% annually to $1,218,994, you’ll owe $237,455 and will still have $981,539 in home equity remaining.

What if the Index value of homes in your region goes up significantly by 6% annually to $1,790,848. Using the same math, you would owe $409,011. However, since EquityChoice has a Capped Payoff Amount, the amount you owe is capped at $347,825 (as of 12/21/23). Instead, you will owe just $347,825 and will still have equity of $1,443,023 remaining.

Note: The Capped Payoff Amount for this loan in CA was $347,824 (as of 12/21/2023)

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