I recently heard about a loan product called an HEI - Home Equity Investment. I spoke with a senior client who has significant equity in her home, however is in need of some cash to sustain her financially. I have done some preliminary research on companies such as Point and Splitero who offer such a product.
I'd appreciate any information anyone may have as to whether this is a viable option or something to be avoided. Thanks!
Accountant · Seattle, WA · Member since 2025 · 371 posts · 141 votes
3w
That’s a good question @Addie Miles , and HEIs are probably worth evaluating carefully rather than dismissing them outright or treating them like a traditional loan. This is one of those situations where the right answer can depend a lot on the homeowner’s broader financial picture and goals.
The main appeal is easy to see: there is typically no monthly payment, which can help someone who is equity-rich but cash-flow constrained. For a senior homeowner, that may feel less burdensome than a HELOC or cash-out refinance, especially if fixed income is a concern.
The tradeoff is that the homeowner is usually giving up a share of future appreciation, and depending on the agreement, the effective cost can become expensive if the home increases in value or if the fees, caps, appraisal terms, or settlement provisions are unfavorable. It is not really “free money,” even though the lack of monthly payments can make it feel that way.
It would also be worth comparing it against other options, such as a reverse mortgage, downsizing, a traditional HELOC, family support, or selling and repositioning the equity, depending on the person's age, cash needs, health, estate goals, and how long they expect to stay in the home.
The key items to review closely would be the payoff formula, appraisal assumptions, agreement length, fees, what happens if the home value drops, what triggers repayment, and how heirs are affected. It may also be wise to have an elder law attorney or financial advisor review the agreement before anything is signed.
So it does not seem automatically bad, but it is definitely a specialized tool that should be compared carefully against the alternatives. In the wrong situation, it could be costly; in the right situation, it may solve a cash-flow issue without adding monthly debt.
Addie — good instinct asking before your client signs anything. A home equity investment isn't a loan at all, so it's worth separating from the HELOC/reverse-mortgage comparison.
How it actually works: the homeowner gets cash now in exchange for a fixed share of the home's future value, with no monthly payments ever. No income verification, no DTI impact, and the share is capped on the front end so it's not open-ended. The homeowner stays in the home and there's no early exit penalty. Minimum 500 credit score, and the score sets how much equity they can tap — roughly 60% combined loan-to-value at 500–539, 65% at 540–579, 75% at 580+.
It's a real option for exactly your client's situation — equity-rich, cash-flow constrained, can't or doesn't want to take on a monthly payment. The tradeoff the other reply flagged is the real one: she's giving up a slice of future appreciation, so it pencils best when the need for cash now outweighs the long-term cost.
Two things I'd verify before she moves forward: the exact payoff formula (how the share is calculated at settlement, including any minimums) and what triggers repayment — typically a sale, but the agreement defines it. It's currently offered in 17 states, so confirm her state is covered.
If you want a second set of eyes on the terms she's quoted, happy to look — Dan
Lender · Member since 2022 · 6k+ posts · 1k+ votes
1d
I have heard of Splitero.
It is basically a shared appreciation mortgage. Their underwriting guidelines are relaxed, however they require you to give up some of your equity and a sale or refi. It can work for people that cannot qualify for traditional lending, however I think it is a very expensive solution in the long run..
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