Home Equity
Home Equity Investments: How They Work and What to Check
Published September 24, 2026 · Last updated September 30, 2026
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The short answer
A home equity investment (HEI) gives you cash now. In return, a company gets a share of your home's value later. You may also hear it called a home equity agreement, home equity sharing agreement, or home equity contract.
You usually don't make monthly payments. Instead, you pay it all back at once, usually when you sell, refinance, or reach the end of the deal. The company usually puts a lien on your home, which is a legal claim against it. If you can't pay when it's due, you may have to sell, and you could face foreclosure.
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Home Equity Investments snapshot
- Monthly payment
- None
- What you repay
- A share of your home's value later
- Example from this page
- $50,000 today could mean paying back $80,000 to $107,500 after 10 years
- Paid back when
- You sell, refinance or reach the end of the deal
The example is our math to show how it works, not an offer. AssistQuote is not a lender or investment company.
Not a quote, offer or approval. Your price comes from the provider. Last updated September 2026.
How does a home equity investment work?
- The company looks at your home's value. It usually orders an appraisal.
- It sets a starting value. Many companies use a number lower than the appraisal. The federal consumer finance agency found some start about 25% lower.
- You get a lump sum, minus any fees.
- You keep living in the home and keep paying your mortgage, property taxes, insurance, and upkeep.
- You settle up later. When you sell, refinance, or the term ends, often 10 to 30 years, you pay the company its share of your home's value.
What you could pay back
Price range
There is no regular interest rate, so we don't list one. What you owe depends on your home's value later and the math in your contract. In a made-up example, $50,000 today could mean paying back $80,000 to $107,500 after 10 years.
Not a quote, offer or approval. AssistQuote is not a lender or investment company.
The CFPB ran its own example. It found a $50,000 home equity contract could cost about $179,085 over 10 years if the home gained 6% a year. The same $50,000 on a HELOC came to about $95,000 under its assumptions. Your numbers will be different, but the gap can be large.
What drives the cost
- The company's share. How much of your home's future value they get.
- The starting value. If it's set below your home's real value, you can owe more than you got even if your home's value never changes.
- How long you keep it. Paying off after 2 or 3 years can have a very high yearly cost.
- Caps and minimums. Ask if there's a limit on what you could owe, and a minimum you must pay.
Home equity agreement pros and cons
Pros
- No monthly payment on the HEI itself.
- May be easier to get if your credit or income won't qualify for a loan.
- If your home loses value, you may owe less, depending on the contract.
Cons
- Can cost far more than a home equity loan or HELOC, especially if your home gains value.
- One large payment later, which may force you to sell or refinance.
- Discounted starting values mean you can owe more even if your home's value stays flat.
- Contracts are complex and not standardized, so they're hard to compare.
- The company has a lien on your home, and you could face foreclosure.
Is a home equity investment a good idea?
It can be an option if you need cash, can't take on a monthly payment, and don't qualify for a loan. But for most people who can qualify, a home equity loan or HELOC will likely cost less. If you're 62 or older, compare a reverse mortgage too.
Ask for the company's payoff numbers in several scenarios before you sign. For worked examples, read home equity investments: read the risks first.
HEI vs. home equity loan vs. cash-out refinance
- HEI: no monthly payment, but one big payment later that can grow with your home's value.
- Home equity loan: one lump sum with a monthly payment, usually at a rate that stays the same.
- Cash-out refinance: a new, bigger mortgage. It changes the rate on your whole balance.
Questions to ask before you sign
- How much cash will I actually get after fees?
- What starting value are you using, and how does it compare to the appraisal?
- What would I owe if my home's value goes up 10%, 25% or 50%, stays the same, or goes down?
- What would I owe after 3, 5 and 10 years?
- What could make the deal come due early?
- How do you handle home improvements I pay for?
- What happens if I die, or if I can't pay when the deal ends?
Keep reading
Compare a home equity loan, a HELOC, or a cash-out refinance.
More home equity guides: Home equity loans · HELOCs · Cash-out refinance · Home equity investment risks · HELOC calculator · All home equity
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Cash-Out Refinance
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