Differences Between Equity Sharing Agreements vs. Selling Property Outright vs. Second Mortgages

3 Ways to Handle Equity When Selling Your Home

When it comes time to sell your home, you’ll likely be faced with a number of difficult decisions. One of the most important choices you’ll make is what to do with the equity in your home.

Equity is the portion of your home’s value that you own outright. For example, if your home is worth $200,000 and you still owe $150,000 on your mortgage, you have $50,000 in equity.

There are a few different ways that you can handle the equity in your home when selling. Which option is best for you will depend on your unique circumstances.

1. Sell Your Home Outright

If you have a significant amount of equity in your home, you may be able to sell it outright and pocket the profits. This is often the best option if you need to generate a large sum of cash quickly.

However, selling your home outright can be a big decision. You’ll need to find another place to live and you may not get as much money as you would if you sold through a traditional real estate agent.

2. Get a Second Mortgage

If you don’t want to sell your home outright, you can take out a second mortgage against the equity. This will give you a lump sum of cash that you can use for whatever you want.

The downside of this option is that you’ll end up owing more on your home than it’s worth. This can make it difficult to sell in the future and may put you at risk of foreclosure if you can’t make your payments.

3. Equity Sharing Agreement

Another option is to enter into an equity sharing agreement with the buyer of your home. This means that you’ll give up a portion of the equity in your home in exchange for a lump sum of cash.

This can be a good option if you need money but don’t want to take on more debt. However, it’s important to make sure that you understand the terms of the agreement before signing anything.

Making the decision about what to do with your home equity can be difficult. However, taking the time to consider your options and understand the pros and cons of each can help you make the best decision for your situation.

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