If you’ve been looking into shared equity investments, you might have come across a couple of companies called Hometap and EasyKnock.
Even though they both offer cash upfront in exchange for equity in your home, there are some vast differences between the two. In this post, we’ll be going over them so that you can get a better idea of what benefits are offered by each of the companies. Hopefully, by the end of this post you’ll know which one is right for you, if any.
What is a shared equity investment?
Before we get into the two companies, let’s talk about shared equity investments. Not everyone knows they exist, and they certainly aren’t as well-known as the traditional home equity loan and HELOC options.
Basically, they are an alternative. First and foremost, because you’re giving up equity in exchange for money, you aren’t borrowing money. There is no debt to be repaid.
Because you gave them equity, the two of you have committed to being partners, so whatever costs or profits the property partakes in affects the both of you. Technically, you can form multiple shared equity partnerships with multiple companies, if they agree to it.
Typically, if you wish to buy back your equity, you can do so within the 30-year term. This usually involves a refinance or cash payoff. Otherwise, there are no monthly payments required. You simply pay the company back upon closing sale of the home, whenever that might be.
How is a shared equity agreement different from a reverse mortgage?
A shared equity agreement differs in multiple ways:
- A shared equity investment isn’t a loan.
- A reverse mortgage has age requirements whereas shared equity investments do not.
- There is no monthly interest to pay with a shared equity investment.
- A reverse mortgage requires you live in the property as a primary residence for the life of the loan, while shared equity investments do not.
How do Hometap and EasyKnock compare?
One of Hometap’s strengths is that they offer a significantly higher equity access up to $600,000. This is quite up there in terms of the industry standard, and much higher than EasyKnock’s $450,000. On top of that, their minimum credit score requirement is relatively low at 500, whereas some other companies such as EasyKnock require scores over 620 as a hard rule. Their origination fees are quite standard at 3%. EasyKnock’s origination fee ranges from 3.49% to 3.99%.
In comparison to EasyKnock however, Hometap serves fewer states, so that is something to keep in mind. You’ll need to apply to know for sure whether your particular property is in their market.
Check out our full Hometap Review
As far as EasyKnock, the great thing about them is that they’ve got offerings beyond the home equity investment aspect of it. EasyKnock purports to make your life easier in the process by offering a couple of additional program options. They are:
- The Sell & Stay Program
- The MoveAbility Program
Even though EasyKnock doesn’t offer as good equity access or origination fees as Hometap, EasyKnock easily makes up for all that by being more than just a simple, straightforward shared equity investment opportunity. On top of the shared equity aspect, EasyKnock helps you with your move-out timeline, or allows you to take your time as to whether you’d like to buy back your equity or ultimately sell the home.
How does that work, you ask? Well, after getting into a shared equity agreement with them, you get to choose a couple of paths, namely to participate in their Sell & Stay Program or their MoveAbility Program. For those that plan to move out, the MoveAbility Program allows you to move into your new home on your own, stress-free schedule. Move out in 1 week, 1 month, or 10 months; it’s your choice. For those that aren’t 100% sure they’re moving out, the Sell & Stay allows you to buy back your property within 5 years if you change your mind about selling the property. That’s plenty of time to get your ducks in a row and make the best decision for your peace of mind.
Check out our full EasyKnock Review
Hometap vs. EasyKnock: Which do we recommend?
We love the flexibility that EasyKnock offers for homeowners. Personally, I’d choose EasyKnock simply on the basis that move-outs are much more stress-free with their MoveAbility Program.
However, if getting the max possible access to equity is your priority, Hometap serves that purpose the best. As long as your property is in one of the qualifying states, you’ll not only get higher equity access with Hometap, you’ll also get better origination fees and a lower minimum credit score requirement.