Are you familiar with Home Equity Investments?

Babs2u

Babs2u

Senior Member
In the last couple of years I have been forced to use credit cards for medical expenses. The monthly payments are high and I have been neglecting some home repairs. I came across some information on Point, a Home Equity Investment. You can borrow a percentage of your home equity with no monthly payments and not pay back until you sell your home.

I realize there are charges and one owes more than the borrowed amount but it might be an option for me. I could pay off my credit cards, repair my house and have money left over. Otherwise I fear amassing more debt and possibly losing my home.

Any comments?
 

I see ads on TV all the time for reverse home equity loans, such as you speak about. I honestly don’t know how legitimate they are or if they are as “too good to be true“ as they sound.

They all say the money does not have to be paid back until the homeowner passes on and the house has to be sold.

All I can say is to keep researching until your eyeballs look like road maps and do your due diligence. If you do make a decision, make sure you go with a company that is well established and not some flyby night place on the Internet. I might start by talking to a local bank or two or three and get their opinions.

I hope you come up with an answer. You should not have to even be considering this. It’s a shame to find ourselves in this sort of position when we get to be this age. You have worked all your life for what you have and you should not have to be worried about losing it because of medical bills. Something is really wrong with this picture in our United States.
 
AI says - "In summary, Point’s HEI is a unique financial tool that provides homeowners with immediate cash access without monthly payments, making it appealing for those seeking financial flexibility or relief from debt. While it offers significant advantages in terms of accessibility and structure, the long-term financial implications depend heavily on future home value changes and geographic eligibility. The product is particularly suited for homeowners who prioritize cash flow over long-term equity retention and are comfortable with a shared appreciation model."

Point is paying you for part ownership in your home and part ownership in any appreciation. It's not a loan, like a Home Equity Line of Credit (HELOC) or reverse mtg. One question I would have is there any circumstance where they could demand their money back and force a sale of the house.

consumerfinance.gov
"A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home as security for the loan. Also like a traditional mortgage, when you take out a reverse mortgage loan, the title to your home remains in your name. However, unlike a traditional mortgage, with a reverse mortgage loan, borrowers don’t make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home. Interest and fees are added to the loan balance each month and the balance grows. With a reverse mortgage loan, homeowners are required to pay property taxes and homeowners insurance, use the property as their principal residence, and keep their house in good condition."

I would find a Certified Financial Planner, that charges for time only, and get with them to review your entire case. I get the feeling that making a mistake here could have serious repercussions. You can research till your eyes fall out, but you want advice from a pro.

Have you tried to get on repayment plan w the CC's at a longer term and lower interest rates?
 
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Have you thought about a balance transfer? I've done them and they're much easier and I think less risky.
Look for a bank that may be offering 0% interest for 12-18 mos to pay off. If you still have a balance...you hop over to another bank w/that offer. (or one similar)

**i would not advise a reverse mortgage
 
dobielvr said:
Have you thought about a balance transfer? I've done them and they're much easier and I think less risky.
Look for a bank that may be offering 0% interest for 12-18 mos to pay off. If you still have a balance...you hop over to another bank w/that offer. (or one similar)

**i would not advise a reverse mortgage
Click to expand...

Yes, I should check into a balance transfer. Berore she died, my sister nearly depleted her savings due to the cost of nursing homes and visiting nurses. She also suffered from dementia and took out a reverse mortgage which I understand caused problems. Thanks.
 
Unique financial tool doesn't sound safe.

Reverse mortgage: FHA qualified only. Most of those you see on TV are not and have shady clauses that can put your house in jeopardy. And you might not qualify because of the large balance you have on the house at this point.

HELOC Home Equity Loan: This one is much easier to get but you would have a monthly payment. You could get enough to pay off your cards and do the home repairs. Interest rates are generally lower than most loans. Talk to your mortgage company.

Or talk to you mortgage company about refinancing. Take only what you need now to keep your payments the same. If your mortgage company will agree.

Try the zero interest cards but find out how high their interests rates will be once that grace period ends just in case you can't roll the balance to a new card.
 
Babs2u said:
In the last couple of years I have been forced to use credit cards for medical expenses. The monthly payments are high and I have been neglecting some home repairs. I came across some information on Point, a Home Equity Investment. You can borrow a percentage of your home equity with no monthly payments and not pay back until you sell your home.

I realize there are charges and one owes more than the borrowed amount but it might be an option for me. I could pay off my credit cards, repair my house and have money left over. Otherwise I fear amassing more debt and possibly losing my home.

Any comments?
Click to expand...

Im not fond of reverse mortgage etc. They sound good but the fees are high and they limit your options
Im guessing you want to stay in your house for now. And your goal is to have lower payments.

Have you considered refinancing your house for a longer period and including your debts etc.
I looked online and Bankrate.com says 6.27% for 30 years and 5.57% for 15 years.
I did a rough comparison for $200000 with an online calculator. This is p& I only. Taxes and insurance not included.
30 yr at 6.27% monthly is $1221.70
15 yr at 5.57% monthly is $1625.19

Not sure of your current rate or how much longer on your mortgage. But if it wont be paid off in your lifetime
what difference does it make if you have 12 years of payments or 30 years of payments.
If your house is worth 300 and you owe 138 you have plenty of equity.

You will be paying more in interest if you finance over a longer time but if you do a reverse mortgage there will be fees too.
Compare the extra interest to the fees.

Another thing to consider for us that are alone and older is Heaven forbid we have to go to the home for old ladies.
Last time I checked a nice one was 12 grand a month. That means they be taking our house to pay for that.
So you might as well spend that money now.
 
Oh dear ..,about 2 weeks ago our current affairs program had a segment about what’s called Reverse mortgages in Australia …
it can be a minefield for the person who takes out the R M if and when they decide to move for heath reasons

The man in question on a current affairs , his parents had recently died and he was thinking he had inherited a million $$$ +++ home ….sadly his parents had taken out a loan / reverse mortgage of about $25.000 years ago
so when the home was to be sold all the proceeds were owed to the lender cause the interest on the borrowed money grows …and grows …due to no repayments being made …
 
Kadee said:
Oh dear ..,about 2 weeks ago our current affairs program had a segment about what’s called Reverse mortgages in Australia …
it can be a minefield for the person who takes out the R M if and when they decide to move for heath reasons

The man in question on a current affairs , his parents had recently died and he was thinking he had inherited a million $$$ +++ home ….sadly his parents had taken out a loan / reverse mortgage of about $25.000 years ago
so when the home was to be sold all the proceeds were owed to the lender cause the interest on the borrowed money grows …and grows …due to no repayments being made …
Click to expand...

And there’s the “too good to be true” catch.

Thank you for posting😇
 
I’m against it unless you have the income and the will to pay it off quickly.

IMO these loans give a false sense of security.

I would cash out and find an apartment or living situation that is within my means and bank/invest the proceeds from the sale to provide a bit more income.

Do what feels right for you and your situation but do it with your eyes wide open. 🫂
 
Aunt Bea said:
I’m against it unless you have the income and the will to pay it off quickly.

IMO these loans give a false sense of security.

I would cash out and find an apartment or living situation that is within my means and bank/invest the proceeds from the sale to provide a bit more income.

Do what feels right for you and your situation but do it with your eyes wide open. 🫂
Click to expand...
100% agree with @Aunt Bea 👍…if you must~ do it with eyes wide open
 
I would not do anything that would jeopardize the home. Consumer credit counseling services are free. I went to one many years ago. They will work with the credit card companies to lower your balance/payments. The "catch" is that all of your credit cards will be cancelled so you will be without one.

Transferring to a zero interest credit card can't hurt, might help to at least lower those payments. As far as they are concerned, they can't do much to you. Worst case, as far as I know, is they may sue and place a lien against your house. They can't force you to sell it nor can they garnish your income (check on that in your state). Just pay what you can. It will effect your credit score, though.

If you insist on using your home equity (I personally would not), I would consider a refi. The downside of that is a refi costs about $5K, which can be added to the new mortgage. Also, make sure you don't finance enough that they add private mortgage insurance.

Look into bankruptcy. I know someone who did that twice. It basically cancelled the credit card balances, according to him.
 
I would be very cautious about taking out a Home Equity Loan.

Some very near and dear friends of ours sounded like they were in a similar situation as to what you described.
Unfortunately for them, the last few years have been unkind to them financially and now they are on the verge of Bankruptcy.

We have helped them out with Cash gifts that we viewed as Charity. However, we can't sustain the level of gifting necessary for them. It is a sad situation.
All that said, please be prudent and careful about taking out Home Equity / Consolidation loans.

You may want to consider checking on financial advise that is offered in your city and/or county at no cost. And it would not hurt to go to your Bank and sat down with them and have the discussion on potential options.

All the best.
 
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