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This product pisses me so much. It's really catching on since I heard two different people asking me about it in a single given week.
Essentially it's a home equity loan that doesn't "charge" your interest or doesn't want you to make a monthly payment. They are just asking for a "portion" of your houses' appreciation once you sell or after 30 years.
If you look at the amount of this "portion", it's MADDNESS! 70% of your house's appreciation can be deducted if you borrow the max of 17.5% of your house's equity. This is after the 3.9% fee they charge on the money you borrow.
I did the math and the "interest that you don't have to pay" ends up being 8.3%/year assuming your house appreciate 5%/year. If you look at their "scenarios", the 30 year example they gave is laughable. What house cost 200k in 1987 is now only worth 500k in 2018? I checked Zillow myself and houses closed to this example are all being sold at 900k+. They downplay appreciation just to scam you. So take a look at this scam and educate anyone who thinks this is a good idea. I know the presentation is pretty. "We will free up money from your house and you don't have to pay us back!". Except the chump change you borrow today will rob you half a million dollars 30 years from now...just when you decide to sell and downgrade and noticed every house 30 years from now are stupid expensive compared to prices today. Oh by the way, if you decide not to sell in 30 years, then prepare to cash them that half a million dollar check..basically putting you in a position to sell. There's nothing else I hate more than mathematical scams like this that will rob your future
Essentially it's a home equity loan that doesn't "charge" your interest or doesn't want you to make a monthly payment. They are just asking for a "portion" of your houses' appreciation once you sell or after 30 years.
If you look at the amount of this "portion", it's MADDNESS! 70% of your house's appreciation can be deducted if you borrow the max of 17.5% of your house's equity. This is after the 3.9% fee they charge on the money you borrow.
I did the math and the "interest that you don't have to pay" ends up being 8.3%/year assuming your house appreciate 5%/year. If you look at their "scenarios", the 30 year example they gave is laughable. What house cost 200k in 1987 is now only worth 500k in 2018? I checked Zillow myself and houses closed to this example are all being sold at 900k+. They downplay appreciation just to scam you. So take a look at this scam and educate anyone who thinks this is a good idea. I know the presentation is pretty. "We will free up money from your house and you don't have to pay us back!". Except the chump change you borrow today will rob you half a million dollars 30 years from now...just when you decide to sell and downgrade and noticed every house 30 years from now are stupid expensive compared to prices today. Oh by the way, if you decide not to sell in 30 years, then prepare to cash them that half a million dollar check..basically putting you in a position to sell. There's nothing else I hate more than mathematical scams like this that will rob your future
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