Hometap Review 2021: Is It Worth It?

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Are you in need of money to fund an upcoming project? This Hometap review gives you an easy way to get funding with no monthly obligations and zero interest.

The need for financing is always here with us, especially when something major comes up that was not on your budget. Home equity has been a great way of accessing funding for many homeowners. One can apply for a home equity loan, HELOC (home equity line of credit), or even sell the house to get the required money.

However, with the need for loans increasing and the number of online finance platforms also growing, homeowners are now presented with even more funding options. One such new platform that is giving personal loan lenders sleepless nights is Hometap. The platform is giving homeowners a new and innovative way of accessing their home equity, to fund their projects.

This Hometap review gives you everything there is to know about the platform, allowing you to decide if it’s the best alternative for you.

What is Hometap?

Hometap logo

Are you home rich but cash-strapped? This might be the best way for you to get financing. Established in 2017, Hometap is a new and innovative finance company that is investing in home equity. The Boston-based company gives homeowners access to their home equity, but in a completely new way.

In fact, it’s an alternative way of “tapping” into your home equity, different from a home equity loan or a HELOC. Instead of advancing you a loan, which you should repay on monthly instalments, Hometap invests in your home equity.

How do I mean?

Hometap invests in your house and gives you the investment money to use for whichever project you have in mind. The investment can be any percentage of your house’s future home equity. Mostly, the term for repayment is 10 years, after which you should settle the investment.

However, this doesn’t mean that you have to wait until the 10-years period lapses to make the payment. You can settle the amount at any time before the end of the investment period, based on the agreement. This means that you are at liberty even to sell your house and settle with Hometap.  

The good thing with Hometap’s financing is that it doesn’t accrue any interest, unlike in HELOC or home equity loans. Also, you’ll be free from monthly loan repayments, which might be hectic sometimes.

How Hometap Works

how hometap works

As we promised, this Hometap review will leave no stone unturned about the Hometap platform. So, how does the platform work?

Hometap works by extending finances to interested homeowners, in exchange for a percentage share in the home’s future equity. The percentage share that Hometap applies for the investment will vary based on certain factors such as your profile, your home’s value, and the amount you need to borrow.

After Hometap gives you the investment money, you have a period of 10 years before settling the agreed percentage. And, you don’t need to make monthly repayments like with loans.

However, you can settle the amount earlier if you don’t want to wait for the 10 years, although the amount paid will depend on the terms of the agreement. If you sell the house either earlier or at the end of the investment period, Hometap receives the agreed share of your home’s equity at the time of sale.

For instance, assume you borrow $50,000 at 10% equity for a term of ten years. If your home’s equity at the end of this period is $700,000, it means that you’ll have to pay 10% of this, which will be $70,000. Hometaps share will be (your home’s appraised value, $700,000 * the agreed share, 10%).

And, even if your home decreased in value, the same principle still applies. You’ll pay the Hometap’s percentage share * the current value of the house.

But, you should also note that there are some charges associated with this process. For instance, you will incur a 3% arrangement fee charged on the investment amount.

Also, you will cater to the cost of the appraisal, as well as any other cost incurred during the closing of the offer. These include costs for attorney/notary, escrow, and document recording charges. Apart from that, you should expect no other charge.

How to Apply with Hometap Money?

hometap application

Applying for Hometap financing follows an almost similar route to that of HELOC or home equity loans. However, the structure and requirements will somewhat differ significantly. Luckily, with Hometap app, you can complete most of the process, even from the comfort of your couch.

The first step here will be to fill an online investment inquiry form, which should take you around 10 minutes. This gives you an estimate of the possible investment for your home – if you qualify. Hometap will also send you a detailed report of the same, and what you should do next.

The second step in Hometap’s equity application is to get your home appraised. This will help to determine the exact value of your house, from which Hometap can now give you a conclusive investment offer. That is if you qualify.

The investment offer usually ranges between 5% and 30% of the current home’s value (up to $400,000). If the final stage is approved, and you are okay with the terms, the offer is finalized, and the investment money is deposited to your account.

The interesting thing with Hometap financing is that you’ll not be adding any monthly obligations to your budget. The investment is payable whenever you choose to, before or at the end of the term.

However, after you receive your money, there are some simple standards that you must fulfil:

  • Pay the home’s mortgage on time.
  • Make timely insurance payments.
  • Keep the home in a good state.

Depending on your home’s value at the end of the investment term, you will either pay less or more than you took. The application process is simple, and you’ll get your money in as little as three weeks.

Who Can Apply for Hometap?

While your home acts as the collateral for the investment, there are still some qualification requirements that you should meet as a homeowner. These include:

  • You must live in the said house for at least 6 months a year.
  • Have at least 25% equity on your home
  • No specific credit score requirement, although most of the approved borrowers have a score of 600 and above.

Also, only people living in the following regions are eligible:

  • Arizona
  • California
  • Florida
  • Massachusetts
  • Virginia
  • Maryland
  • New York
  • Oregon
  • North Carolina
  • Oregon

Is Hometap Legit?

Based on the various online Hometap reviews, the platform seems like a genuine one. Hometap enjoys an average 4.8/5 stars rating on Trustpilot, from the current 240 customer reviews. This is pretty high, and it just confirms how satisfied customers are, with the platform.

At the time of this review, around 91% of reviewers on Trustpilot, rated the platform as excellent, while just 1% of them rated it as “BAD”.

And if online reviews are not enough for you, Hometap also enjoys an “A” rating from BBB (Better Business Bureau), and it’s fully accredited.

Hometap Review: Pros and Cons

Like any other platform, and based on the one looking at it, Hometap has various downsides even as it enjoys numerous benefits. This Hometap review sheds more light on this.

Pros of Hometap

Hometap is a platform that allows you to access your home equity when you most need that funding. The upsides of using Hometap platform includes:

  • Zero Interest on the Investment

Unlike other home-equity-based funding that attracts interest rates and require monthly repayments, Hometap is different. While it gives access to your home equity, it does so as an investment. It requires you to pay a certain percentage of your home’s future value on or before the agreed time.

Essentially, as we’ve seen in this Hometap review, Hometap is not a lender. On the contrary, it’s an investor, investing in the future growth of your home’s value. This means that you get money to sort out your needs, without adding more strain to your monthly budget.

  • No Home Inspections

During the entire application process and investment period, the only time you’ll see Hometap agents at your home is during the home appraisal time. After the investment is approved, Hometap doesn’t keep sending people to inspect your house.

As long as you are making timely mortgage and insurance payments, you’ll meet these guys again when you are selling the house or settling the investment. All this gives you some peace of mind.

  • Easy and Straightforward Application Process

Unlike most other financiers who slap you with tones of impossible requirements, the story with Hometap is quite different. Only a few simple pre-approval requirements and your funds are approved.

The entire process is also relatively easy, and you can complete it from the comfort of your couch. This will take an average of 10 minutes, and you are done. Also, in as little as three weeks, you’ll have the money wired to your account.

  • Doesn’t Affect Your Credit Score

The platform doesn’t do a hard credit check before approving the investment. This means that even after getting funds from Hometap, it won’t affect your credit score.

This pretty different from home equity loans and HELOC, who will need that positive credit score before advancing you any loan.

  • Transparency

With Hometap, you are sure of every detail before committing yourself to the investment. This means there are no surprises, fine print, or hidden fees that will shock you later. The platform lays everything on the table, for you to make a wise decision.

Cons of Hometap

Here are some issues we thought you should consider:

  • Possibility of Forced Sale

When things don’t go as expected for you and the term ends before settling the investment, there’s the danger of forced sale. Selling your home like this might not always be ideal.

This is because you might not have enough time to negotiate for the best deal. You might be forced to settle for a much lower price, just to meet your investment obligation to Hometap.

  • Appreciation Risk

Although this is what Hometap cashes on, it might not be so good for the homeowner. When the home appreciates during the investment period, it means that the equity share for Hometap also grows.

Where the home’s value shoots significantly, what you pay to the investor may be way higher than previously anticipated. This is something you might need to consider.

  • Not for Emergencies

While we consider Hometap’s application as fast, it might not be the best fit for emergencies. If you need money right now, three weeks might be too long away.

This means that you might be forced to take a loan, which might be a bit faster, to help sort out your emergency. But, before taking that personal loan, always be keen on the offered APR. Some of these lenders may slap you with exorbitant APRs that cost you an arm and a leg.

See related: 5 Proven Ways to Invest in Real Estate with Little Money

Is Hometap Safe and Worth It?

is hometap worth it

The goal of this Hometap review is to help you determine whether the platform is ideal for you or not. However, this will all depend on you.

For starters, we’ve determined that Hometap is not a scam and that it’s giving homeowners an easy, interest-free way to access their home equity. But is it worth it?

Well, the answer to the question varies. Depending on what you intend to do with the money, the investment might be quite worth it. Also, if you can pay the money on time, there’s no doubt that it will have sorted you out.

The only time when Hometap isn’t a worthy or safe route is when you are unable to settle your investment on time, and you are forced to sell your house. Selling the house when you’ve not planned for it, is never the greatest thing to do.

Also, if the home’s value goes too high, you might feel that pinch when writing that repayment check to Hometap. This is because Hometap’s share rises as your home’s value grow.

Final Verdict

Although Hometap is a pretty new platform, and so is its mode of operation, this doesn’t mean that it’s not a great alternative for accessing home equity. If you don’t want to deal with the monthly obligations that come with personal loans, Hometap offers an ideal option.

However, before you go committing yourself, ensure that you’ve done enough research. Understand the platform’s operations in and out, so as to avoid any regrets some years later. With our Hometap review, you can easily determine whether or not the platform fits your needs, and if it’s the solution you seek.

All in all, the platform seems like a great option.

Hometap Ratings

  • Overall rating – 4.8/5
  • Ease-of-Use – 4.5/5
  • Features – 5/5
  • Customer Service -4.8/5
  • Value for Money – 4.5/5

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