Think twice before dealing with companies that want to buy equity in your home

Real Estate

Think twice before dealing with companies that want to buy equity in your home

Home equity investment companies lend you money, based on your home’s equity, for a fixed period of time. For this, you give them a percentage of your home’s future appreciation. This is risky because if you don’t sell your home before the loan term expires, you have to pay back the loan amount, plus the appreciation percentage in the contract.

If you can’t pay it back, the company could foreclose on your home. Instead, consider getting a home equity line of credit from a bank or mortgage lender. You only borrow what you need and can often pay just the interest for an initial period. Consult with a financial planner before making any financial decisions regarding your home’s equity.