Differences Between Equity Sharing Agreements vs. Cash-Out Refinance

Equity sharing agreement vs. cash-out refinance: What to consider

When you own a home, there are two primary ways to access the equity you've built up: through a cash-out refinance or an equity sharing agreement. Both have their pros and cons, so it's important to understand the key differences before making a decision.

A cash-out refinance allows you to take out a new loan against your home equity. This can be a good option if you need a large amount of cash or if you're looking to consolidate other debts into one monthly payment. However, it's important to be aware that you'll be starting from scratch with a new 30-year loan, which means you'll be paying interest on the full amount for the life of the loan.

An equity sharing agreement, on the other hand, allows you to sell a portion of your home's equity to an investor in exchange for cash. This can be a good option if you need a smaller amount of cash and you're comfortable with giving up a portion of your equity. However, it's important to be aware that you'll no longer have complete ownership of your home and that the value of your stake will fluctuate with the housing market.

So, which is right for you? The answer depends on your individual circumstances. If you're not sure which option is best, it's always a good idea to speak with a financial advisor or mortgage specialist.

Get Started