They sound great on paper:
You get a $50,000 check with no interest and no payments.
But if that sounds too good to be true, it’s because it is.

Here’s what’s really happening.

You’re not borrowing the money, you’re selling a piece of your home.
These companies give you cash now in exchange for a percentage of your home’s future value, usually when you sell or refinance.

Let’s say your home is worth $500,000 and you owe $350,000.
An HEA company gives you $50,000, and in return, you agree to give them 20% of your home’s future value.

Fast forward eight years — your home’s worth around $738,000 — and they walk away with $147,000.

That’s nearly a 300% return on the money they gave you.

A HELOC is a revolving line of credit secured by your home, usually with a variable interest rate.

You borrow only what you need, make small monthly payments, and still keep full ownership of your equity.

That same $50,000 pulled from a HELOC would cost around $400 per month, and when you sell, you keep the appreciation, not the bank or an investor.

The Consumer Financial Protection Bureau recently warned that HEA repayment amounts can grow as fast as 19–22% per year in the early years, far higher than traditional home-secured loans.

Some even include restrictions on when or how you can sell your home.

So these agreements might help in a financial emergency, but they’re the modern-day payday loans for homeowners.

If you need to tap into your home’s equity, always look at a HELOC or cash-out refinance first.

They keep you in control of your property and your future gains, not an investor waiting to cash in on your hard work.

Continue learning, plan smart, and, as always, don’t pay more than you need to for your home. 🏡💡

- Brandon Brotsky

P.S. New here? Start with our Smart Homebuyer Welcome Kit, it’s a simple guide to rates, payments, and strategies that could save you thousands.