Hometap is a home equity investment company from Boston that offers non-traditional lending solutions based on your home’s equity.
Instead of a typical home equity loan that offers a traditional loan and charges monthly payments with interest, Hometap offers you cash today for a “share price” when your home sells in the future.
When you do sell your house, you’d split sale proceeds with Hometap based on appreciation (or depreciation) since you took out the loan. If your home’s value goes down, you’ll pay Hometap less than if the value goes up.
The minimum amount you’d pay Hometap at the sale is 15% of your home’s value (not 15% of the loan amount), which would apply to depreciated properties. You’d pay a higher percentage if your home increases in value.
This lending strategy may work well for homeowners who need to pay off debt, who have significant equity in their home, and who expect to sell in around 10 years. But it won’t work as well for homeowners who want to keep their equity intact.
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🔎Hometap at a glance
Overall rating: 4.7
Pros:
- No monthly payments
- Fast funding process
- Lower credit scores OK
Cons:
- Limited availability in certain states
- Homeowners must share future appreciation
- Costly compared to traditional home loans
Company Details
Ownership: Hometap is privately owned and part of the 2024 Inc. 5,000
Service area: AZ, CA, DC, FL, IN, MI, MN, NV, NJ, NY, OH, OR, PA, SC, UT, VA, WA
Other services: Investors can invest in real estate assets through Hometap
Financial health: Valued between $980 million and $1.5 billion
Who Hometap works best for
People with significant home equity who don’t want to accrue new debt may want to look into Hometap. You may be a good fit if you:
- Want quick access to cash without monthly payments
- Have a fixed income and can’t add to monthly expenses
- Earn a non-traditional income that affects lending potential
- Need to access their home’s value but have low credit
Who should avoid Hometap
Opting for a Hometap Investment isn’t for everyone. You may want to avoid investing through Hometap if you:
- Live in a quickly appreciating market
- Can qualify for a lower-cost HELOC or cash-out refinance
- Plan on selling your home sooner than 10 years
Hometap reviews
| Source | Customer rating: 4.7 |
|---|---|
| Better Business Bureau | 4.42/5 (75+ reviews) |
| 4.3/5 (250+ reviews) | |
| Trustpilot | 4.9/5 (4,000+ reviews) |
Hometap is highly rated by customers, with more than 4,000 reviews and an average rating of 4.7 out of 5 across the Better Business Bureau, Google, and Trustpilot.
People praise Hometap for its straightforward process and knowledgeable team that offers outstanding service. However, a handful of negative reviews state that the investment company may unexpectedly choose not to move forward after weeks of waiting.
‘The investment liaison was great.’
Happy customers rave about the support they receive from Hometap’s Investment Liasons (customer service representatives). For instance, Michael said his liaison went above and beyond to make the deal happen.
The investment liaison, Madison, provided straightforward details for every step of the way, was courteous, and available. When we hit a snag, [a] clear path was presented to overcome. [The] deal was straightforward right to the close. Other support team members on chat were also responsive for issues that came up.
‘Money when needed, payment when prepared.’
Receiving a cash disbursement without monthly payments is a significant factor in customer satisfaction. Debbie N. was pleased to receive funds without the hassle of another monthly payment.
...My Advisor walked me through the whole process and is there should I have questions along the span of my loan. Having funds without all the hassle of a[n] equity payment now when I have the extra expenses was a deciding factor on ten year investment.
‘Upfront and truthful from the beginning.’
Happy customers praise Hometap for being upfront and honest about the entire process. Terry S. was pleased that the investment company kept their promises throughout the deal.
Hometap has been upfront and truthful with me from the beginning. I ‘interviewed’ 4 other companies. … After all was repaired, Hometap had promises made, promises kept. They kept me informed at every step of the way and their contract was superior to the others...
‘I got turned down by another lender.’
Homeowners with lower credit or unique financial circumstances often receive funding when other lenders aren’t willing to work with them. Joanne T. had this to say about her Hometap experience.
There are so many options out there but not as many for me. I was dealing with a solar lien that made it difficult to get equity out of my home. I got turned down by another lender because of it. Then I decided to try Hometap. Olivia was wonderful to work with. She made the process easy...
‘Charged equivalent to 50% interest.’
Hometap’s non-traditional lending structure looks like a significant interest charge because the company essentially takes part-ownership of your home. John C. felt ripped off after learning about the costs.
I strongly advise against using this company. … [T]wo years later, we find ourselves being charged an exorbitant amount, effectively equivalent to a 50% interest rate. This is an astonishing return for Hometap but an unfortunate situation for homeowners.
Hometap pros and cons
Pros
- Access home equity without monthly payments
- No income or credit score requirements
- Quick approval and funding process
- Available for various home types
Cons
- Hometap takes a share of future home value appreciation
- Limited to certain states
- Long-term costs could be higher than other home equity options
- Homeowners may lose more equity than expected if their home value rises significantly
Alternatives to Hometap
| Alternative | What it is | How it unlocks equity |
|---|---|---|
| Clever Offers/cash buyers | Cash offer real estate investment network | Homeowners sell for a cash deal |
| Hometap | A private home equity investment | Customers receive cash in exchange for home equity when selling |
| Home equity loan/second mortgage | A loan on the home’s equity | Customers receive a loan disbursement equal to the home’s equity |
| HELOC | A line of credit that borrows against the home’s equity | Customers open a line of credit against equity |
Comparing Hometap to other options
Hometap offers a unique service compared to other lenders. Instead of a traditional loan, customers accept Hometap as a co-investor on their property value.
You have no monthly payment and no additional liens on your home. However, due to its structure, Hometap often gets around 50-100% back on top of its initial investment.
If you have significant equity in your home (and decent credit), a more traditional loan on your home’s equity might be a more cost-effective route. The downside is that you have added monthly expenses and carry more debt.
For homeowners who want to sell soon, selling through a cash-offer network like Clever Offers can help you access your home’s equity quickly.
Clever Offers matches you with the top real estate investors in your area to help you receive the best cash offer on your home. You can also get matched with a reputable real estate agent in your area to help you understand what you can make on the market.
Want to learn how much your home is worth? Try Clever Offers today!
How Hometap works
Step 1: Request an estimate
Request an estimate from Hometap by filling out a short questionnaire on the company’s website to see if your home qualifies.
Step 2: Complete the application
If you pre-qualify* and feel like Hometap’s services are a good fit, you’ll complete a full application online.
Step 3: Evaluate your offer
After the Hometap team reviews your application, your loan liaison will extend an official offer. You can choose to accept the offer or walk away.
Step 4: Receive your funds
If you choose to proceed with the process, Hometap will wire you the funds for your equity investment.
Step 5: Repaying your equity investment
You have up to 10 years to sell and share your profits. Or, you can pay the investment back in full when the 10-year term ends.
*Pre-qualification does not mean you will be approved for a Hometap loan.
How much do you pay back to Hometap?
The amount Hometap earns on a 10% investment (the typical investment amount) increases or decreases with the property’s projected value.
If the value stays the same or appreciates, Hometap takes a 20% share of your home’s value when you sell. And if your home depreciates, Hometap takes a lower 15% share when you sell.
If you choose not to sell your home and settle early, Hometap will calculate its share based on your current property value and request 15-20% of your home’s value, depending on the home’s value at the time of settlement.
Here’s a breakdown of how it works in different markets:
| Initial home value: | Initial investment: | Projected value after 10 years | Your share* when you sell: | Hometap’s share: |
|---|---|---|---|---|
| $500,000 | $50,000 (10%) | $460,000 (-8%) | $391,000 (85%) | $69,000 (15%) |
| $500,000 | $50,000 (10%) | $480,000 (-4%) | $408,000 (85%) | $72,000 (15%) |
| $500,000 | $50,000 (10%) | No change | $400,000 (20%) | $100,000 (20%) |
| $500,000 | $50,000 (10%) | $764,678 (+4.34%) | $611,742 (80%) | $152,936 (20%) |
| $500,000 | $50,000 (10%) | $1,079,462 (+8%) | $863,570 (80%) | $215,893 (20%) |
| *Net profit; from this balance, you will likely still have to pay realtor fees, closing costs, and other expenses related to the home sale. | ||||
Hometap: The bottom line
Hometap gives homeowners a solid alternative to equity loans without taking on new debt. The unique investment structure eliminates monthly payments and helps customers tap into their home’s value.
However, the downside of investing with Hometap is that the final payout can be a massive chunk of your earnings when you sell. If your home value appreciates over the 10-year term, you should expect to pay back at least double the initial investment.
A more traditional lending option might work better if you want to access your home equity and have good credit. Accessing your equity through a HELOC or cash-out refinancing through a local lender may work better.
And if you want to sell your home and get cash on the spot, selling to a cash purchase real estate service like Clever Offers might be a better fit.
Need a lower-cost way to tap into home equity? Consider Clever Offers. Clever Offers helps you find the best cash offer for your home by connecting you with reputable cash buyers in your area. Get started today!