EquityChoice is a smart alternative to traditional home equity loans or co-investments that allows homeowners access to the wealth locked in their home, especially for those who have recently refinanced at historically low mortgage rates. 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.

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.

It’s simple. 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.

Allowable sources include, but are not limited to, checking and savings accounts, retirement accounts (401k, IRAs, etc.), and non-liquid/ cash holdings (stocks, bonds, mutual funds). In addition, some business assets may also be considered.

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.

Yes. This is one of the many benefits of EquityChoice. You are in control of your equity and proceeds, which also includes paying down your loan at any time, without a prepayment penalty.

Partial prepayments are calculated using the Indexed Value of the home at any given period. If there is no Indexed Shared Appreciation amount, the prepayment will be allocated towards the outstanding principal balance and the fixed interest. If there is an Indexed Shared Appreciation amount (based on the Indexed Value), it is allocated towards the outstanding principal balance, the fixed interest and then the Indexed Shared Appreciation Amount.

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.

Absolutely! You continue to live in the home that you love, using it as you see fit, so long as you remain the primary occupant. In addition, you keep all the tax advantages that come along with being a homeowner. Of course, just like any mortgage, you must continue to pay property taxes and insurance, and keep up with routine maintenance of the property. Also, like other mortgages, your home is security for your EquityChoice loan and we record a mortgage on your home.

You have the choice to use your loan proceeds however you want, with many EasyChoice customers leveraging these funds to diversify real estate or financial planning investments, start or invest in a business, replace high-cost lines of credit, renovate their home, fund college tuition, provide a down payment on another property, or consolidate high interest, unsecured debt.

Yes, you may still borrow the equity you have built in your home. When we close the EquityChoice loan, we will set a 1st lien debt limit that approximates the unpaid principal balance on your primary 1st lien mortgage. In the future, you can refinance your primary 1st lien mortgage as long as it doesn’t surpass the 1st lien debt limit. If you want to access proceeds greater than the 1st lien debt limit set, you can simply refinance and choose to pay off the EquityChoice loan.

Of course, you have the option to refinance your primary mortgage to reduce your interest rate. EquityChoice is a second mortgage, secured by a lien on your property that is subordinate to the primary (1st lien) on your home. As is typical with
any second mortgage, you will be required to pay a re-subordination fee to the servicer of your loan to keep your EquityChoice in place while simultaneously completing your rate refinance. Note that an EquityChoice loan may impact your
ability to refinance your first lien mortgage loan depending on the lender’s underwriting criteria.

EquityChoice offers you access to funds at a fixed interest rate, 4-8% pts. less than current rates of comparable home equity products*, while sharing in a portion of your future appreciation, without forcing you to give up the historically low rate you secured on your current first mortgage. Best of all, since no monthly payments are required, you have extra money to put towards other needs.

*Average based on internal analysis through 08/31/2023 interest rates for home equity loans and home equity lines of credit.

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.

When you apply for your loan, we use an independent 3rd party appraiser to estimate the value of your home (referred to as your Appraised Value). To account for market volatility and naturally occurring appraisal variance, your Appraised Value will be reduced by generally 5% to establish your home’s Initial Agreed Value which will be used as the starting point for calculating the future appreciation. In order to determine the amount of appreciation you will owe at time of payment (partial prepayment or a Maturity Event), we look to the Index to calculate what we refer to as Indexed Shared Appreciation. By using an Index, we can determine the approximate value of home prices in your region at any given point in time.

Specifically, to calculate the Indexed Shared Appreciation we will:

• refer to the current Index value published for your Note Date at time of payment, which is the Initial Index
• compare the Initial Index to the most recently published Index value prior to payment date. This determines the Index Change Percentage
• multiply the Index Change Percentage by the Appraised Value, the result of which when added to the Appraised Value, is the Indexed Value of your home
• subtract the Initial Agreed Value from the Indexed Value, then multiply that by your HAIS. That result is finally multiplied by the outstanding principal balance at the time of payment divided by the original principal balance to reach the Indexed Shared Appreciation amount.

Indexed Shared Appreciation = ((Indexed Value – Initial Agreed Value) * (Home Appreciation Interest Share)) * (Outstanding Balance/Original Principal Balance)

While you may use the loan proceeds from your EquityChoice mortgage to invest in a new property, you cannot use it as the 1st lien on a new home. This is because EquityChoice is a 2nd lien on your primary residence, and part of the requirements includes owner occupancy. In other words, EquityChoice offers you the opportunity to refinance an existing property with a mortgage; but, it cannot be used as the primary mortgage for the down payment when purchasing a new home.

We understand that some homeowners may have no mortgage on their home whatsoever. We’re exploring additional new and innovative ways to ensure all your home financing needs are met. Check EquityChoice.com to stay up to date with upcoming product releases.

Unlike other shared equity options, significant improvements or modifications you make to your home will not impact the amount you owe of Shared Appreciation. Instead, all calculations of appreciation are based solely upon movements in the Index, which tracks property values generally in the geographic region where your property is located.

This means that the value for your individual home may have appreciated more (or less) than the amounts indicated by the Index for homes in your area. Further, capital improvements to your home (or conversely, any deferred maintenance) will not be considered in determining the amount of your Indexed Shared Appreciation.

EquityChoice mortgages require no payments until maturity. However, if you find yourself behind on your mortgage in 1st position, the lender may follow through with any proceedings, such as foreclosure, to settle your debt. The EquityChoice
lender will participate in those proceedings if you are seriously behind on payments. The same is true if you default on EquityChoice, including on making the payment due at its maturity.

A borrower who takes pride in homeownership, maintains their homes physical condition, intends to remain in their home for an extended period, and appreciates the freedom to use the loan proceeds to remodel their home, enhance their lifestyle, fund their small business, or use the loan proceeds to invest in income-producing rental properties, limited partnerships, or portfolios of listed equity securities.

EquityChoice can be a smart alternative to high cost, small business lines of credit or debt factoring options. You may find it to be an attractive alternative to certain limited maturity SBA loans that require a personal guarantee which includes your home equity even though the proceeds fund your business. Plus, since you aren’t required to make any payments until maturity, EquityChoice can be used to significantly increase your monthly cash flow.

Since you don’t have to make monthly payments on EquityChoice until the end of the loan term, you may find that it’s to your economic advantage to reinvest the proceeds in income producing rental real estate or portfolio growth of dividend producing listed equity securities. Other investments where you turn time into an advantage – the time when you don’t owe principal or interest but receive investment income – might be appropriate as well.

You should discuss the appropriateness of EquityChoice with your Financial Advisor, Business Consultant, and/or Tax Accountant. They can explain the steps you may need to take and how you might take advantage of the tax laws that allow you to re-characterize the 1098 interest deduction as current business or investment interest expense.