Hometap Reviews

Hometap isn’t a traditional lender. Instead, it offers home equity investments (HEIs), which are agreements where you get a lump sum of cash in exchange for a percentage of your home’s future value.

The main advantages of HEIs are the absence of monthly payments and easier qualification requirements for borrowing. The main downside is that you’ll need to settle the investment (pay Hometap its percentage) within 10 years. This requires a large lump sum of cash. Without it, you may need to refinance or sell the home to settle.

Hometap’s share is based on a percentage of your home’s value at the time of settlement. If the home appreciates, you could end up owing significantly more than you received.

Hometap only offers one financial product: home equity investments. You get a lump sum upfront and settle the investment at the end of the 10-year term. You can fund the settlement through savings, a loan, refinancing or selling the home.

Hometap also offers the Home Equity Dashboard, a tool that helps you keep track of your home’s value. It offers real-time home value estimates, equity forecasts, a renovation calculator and other tools.

Since Hometap isn’t a lender, it doesn’t charge you interest. Instead, your settlement amount is based on the percentage of your home’s future value that Hometap receives.

Hometap uses an X-for-Y pricing structure. That means it gives you X% of your home’s current value upfront in exchange for Y% of your home’s value when you settle. The percentage Hometap receives depends on when you settle and whether your home’s value goes up or down.

If your home’s value increases, Hometap applies these multipliers to calculate its share:

• Settle in years 0 to 3: 1.5 times the original investment percentage
• Settle in years 4 to 6: 1.778 times the original investment percentage
• Settle in years 7 to 10: 2 times the original investment percentage

If your home’s value decreases, Hometap uses the 1.5 times multiplier regardless of when you settle.

Here’s an example:

If you take a 10% investment, Hometap gives you 10% of your home’s current value. If you settle in year 10 and your home’s value has increased, Hometap’s share would be 20% of your home’s value at settlement.

Hometap charges a processing fee equal to 4.5% of the investment amount, up to $20,000. This fee is deducted from the amount you receive.

The company doesn’t charge other direct fees, but third-party fees are also deducted from the investment amount. Appraisal, title and government filing costs vary based on your property, location and investment amount. Closing fees are $895, except in Pennsylvania, where there are none.

Hometap provides a detailed estimate after you submit your application so there are no hidden fees or surprises.

Hometap follows a straightforward application process:

1. Request an estimate: The process starts with a simple online estimate that should take just a couple of minutes. After this, you’ll be paired with an investment manager who will guide you through the rest of the process.
2. Fill out the application: If you decide to move forward, you’ll complete an application. You can do this on your own or with the help of an investment manager over the phone. This generally takes about 10 minutes. Hometap will then schedule an appraisal and review your application, property and other details.
3. Review the details: Once the application is approved and the appraisal is complete, Hometap will send you the final details, including the investment amount and a breakdown of fees.
4. Schedule signing: If you accept the agreement, you’ll schedule a signing.
5. Receive your funds: Once everything is signed, there’s a three-day waiting period, after which Hometap will wire your funds (or send a check, if you prefer). It can take up to 10 days to receive the funds, though the company says it’s usually sooner.
6. Settle the investment: After a 10-year term, you’ll need to settle the investment. This means you pay the previously agreed-upon amount back to Hometap. You can also settle before the 10-year period is up, if you prefer.

Hometap’s broad eligibility requirements include:

• Property not held by an LLC or in an irrevocable trust
• At least 25% equity in your home
• A minimum FICO score of 575

You also need an active homeowners insurance policy. If you don’t have one, Hometap can potentially secure one for you. You must also add Hometap to your policy so it can be included in claim payments.

Hometap specifies that not everyone who applies will qualify, even if the criteria above are met.

Yes, Hometap is a legitimate home equity investment company. It’s been in business since 2017 and is available in 21 states. The easy application process, lack of monthly payments and flexible qualification requirements make it a good option for those who need a lump-sum cash payment without taking out a traditional loan.

That said, HEIs aren’t risk-free. You’ll need to settle the investment all at once at the end of your agreement, and the amount may be hard to predict because it depends partly on your home’s value. If you can’t cover the settlement, you may have to refinance or sell your home.