Any experience with the HomeLight program?

Question

Home Light is a company that will essentially loan you money against the equity in the house you re selling. My son is getting ready to buy a new house and this was suggested by an agent. Advantage being that you do not have to make a contingent offer if you find a house you really like....and/or it gives you time to move leisurely instead of in a rush.

Anyone used this? Thoughts?

Derek Brickley · Answer

Hey Bruce!

Being as transparent as I can with this, there is a huge benefit to the Homelight Program and we have used it before to help people looking to get into a new home.  With this, as a lender we can exclude any payments for the current home to help increase your borrowing power for a new home.  You don't make payments on this, and there is no interest accrued.  If for some reason you can't/don't sell the home within the timeframe after you close on the new home they will buy the home for a preagreed upon amount, then try to resell the home.  Any profit made from them reselling the home comes back to you directly.

Here is the reason that this program does not fit most people.  The charge for doing so can definitely cut into your equity as it can be 10's of thousands depending on the estimated value of the home.  Depending on your equity position, you may not be able to access as much as you need/want to actually find another home.

So my personal take: If you feel like having a non-contingent offer will allow you to be more competitive and save $10k+ on the new home because of a bidding war/multi-offer situation, then it may make sense.  If your market isn't as hot right now or if you don't have significant equity in the home, then chances are you may be better off submitting a contingent offer and relying on the market.  Happy to go into more detail with you on how we do this, so feel free to reach out with any questions.