Hometap lets you transform home equity into flexible cash flow. Instead of principal and interest payments, the company accepts part of your home’s future value.
Hometap offers access to your home equity without a loan or monthly payment. Instead, the company acts as an investor and provides your requested funds in exchange for future proceeds when you sell, take out a home equity loan, or repay a lump sum.
You may want to consider Hometap if you have significant equity in your home but lack the income or credit for a home equity loan. It might also be a good option to turn your equity into cash flow without committing to additional debt and ongoing interest.
Hometap takes the risk of investing with the expectation that your home value will appreciate in 10 years. If that occurs, you could end up paying much more than anticipated in exchange for the initial investment. On the other hand, if the home loses value the percentage you owe, Hometap does not change. In that scenario, you would come out ahead and owe less than expected.
Products & Services
Hometap offers a home equity loan alternative. Similar to an investment firm that funds promising businesses, the company invests in the equity in your home to take advantage of the possibility that it will increase in value over the next decade.
Unlike many home equity loans, Hometap does not restrict your use of funds. With this program, you can obtain flexible cash flow for:
- Property renovations
- Higher education costs
- Purchase of a vacation or investment property
- Debt consolidation
- Retirement living
- Emergency expenses
- Business start-up costs
- Investment opportunities
While you do not have to make monthly payments toward Hometap’s investment, you do have to agree to settle the amount within the next 10 years. The company does not charge prepayment penalties if you settle your account before the 10-year mark.
You can decide to sell your home anytime after taking a Hometap investment. You agree to notify the company when you plan to list the property and must do so at or above the home’s current fair market value. You must also provide a copy of any legally binding offer within 24 hours of receipt and Hometap will work with you to settle its investment during closing.
Rates and Terms
Hometap charges an origination fee of 3% on the investment plus signing fees such as appraisal, title, and transfer charges. For example, if you request $50,000 from the company, the cost of the investment is $1,500 plus fees. You must pay these costs via wire transfer when you receive your contract, about four to seven business days after your initial application.
When you sign an investment contract with Hometap, you agree to pay 13.9 to 16.7% of the value of your home at the 10-year settlement date. Returning to the $50,000 investment above, let’s say your property is appraised for $500,000 when it’s time to settle with Hometap. Based on an average 15% agreement, you would owe the company $75,000.
The company does have a 20% cap on appreciation. Under this policy, the company will not recoup more than 20% of the home’s annual value increase at the end of the term.
Application Process and Qualifications
You can find out in seconds whether you prequalify to work with Hometap. When you click the Get an Estimate button at the top of the homepage, you enter information about your property address along with your personal details. If you are eligible for an investment, you will receive the preapproval amount immediately.
The next part of the Hometap process requires a five-minute questionnaire. All you have to do is go to the Hometap website, click the Is Hometap Right for Me? button, then enter your property zip code. Next, you select your intended use for the proceeds of Hometap’s investment. You will also answer questions about your current financial situation and the amount of money you want to access through Hometap.
On the final screen, you fill out your contact information and click Submit. When you take this step, you agree to receive emails, calls, or texts from Hometap representatives who will help you complete your application.
If you decide to move forward with Hometap, the company assigns an investment manager to help you navigate the process of finalizing a personalized solution. If you do not qualify, you can request that Hometap contact you if you become eligible for a future program.
Hometap requires a professional appraisal of your home. Based on this information, the company will provide a final offer ranging from 5 to 20% of the property’s value. Hometap offers a maximum investment amount of $600,000 or up to 30% of the value of your home.
You can potentially use Hometap if you have at least 25% equity in the value of your condo or single-family home. The company does not have an established debt-to-income ratio for eligibility. You must have a minimum credit score of 500, with increased chances for approval if your score exceeds 600.
Hometap says it takes about three weeks to complete the investment process and receive your funds if you qualify.
You can call the toll-free Hometap customer service line for assistance, open Monday through Thursday from 8 a.m. to 8 p.m. Eastern standard time (EST) and Friday from 8 a.m. to 5 p.m. EST. When I tested the service, I pressed 3 to speak with a member of the investment management team. I waited on hold for less than a minute before someone answered. You also have the option to leave a message requesting a call back from a team member.
To email a customer service representative, you can complete the site’s online form or send a message directly. When I completed this form, I received a response that said, “Thanks for sharing your information with us. We’ll be in touch soon.”
At press time, I have not yet heard anything further through email. An online chat feature was offline the few times I visited the Hometap site.
Hometap can be a great option if you have significant home equity but average credit or below. The company’s program also makes sense if you need to finance medical bills, pay for education, consolidate debt, or fund other life events but do not want to increase your monthly debt payments.
As mentioned, Hometap currently serves homeowners in only 15 states. You should also consider the potential value of the stake you give up in your home’s future equity. Calculating the estimated cost of a Hometap investment compared to the cost of a home equity loan can help you make the best decision for your financial needs.
Hometap does not provide the quick turnaround of other funding sources, such as personal and home equity loans. As a result, it’s not the best option if you need fast cash for an emergency or time-limited opportunity.
You may also want to go a different route if you plan to stay in your home for longer than a decade. In this case, you would have to use another funding source such as savings or a home equity loan to repay the Hometap investment. If you don’t have the money to pay the established percentage and cannot qualify for a loan, you may have to sell the property.
Is Hometap a legitimate company?
Hometap is a legitimate investor in residential properties in exchange for a percentage of your home’s future value. The company has accreditation and an A+ rating from the Better Business Bureau, reflecting a low level of consumer complaints.
What percentage does Hometap take?
Hometap takes 13.9 to 16.7% of your home’s fair market value at the time you settle your investment agreement. You can settle by selling your home, taking a home equity loan, or paying the company a lump sum in cash after ten years elapses.
What credit score does Hometap require?
You must have a credit score of at least 500 to use Hometap. You must also have sufficient equity in a qualifying property and meet the company’s other eligibility requirements. For the best approval odds and terms, you should have a score of at least 600. It’s easy to check if you prequalify.