Hometap Review: How a Hometap Investment Works

Best Overall

4.8 _/5

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Home Equity Investment

• Access up to $600,000 in as little as three weeks
• No monthly payments or debt
• No prepayment penalties during the 10-year term
• Assigned a dedicated Investment Manager during the term

• Transaction fee of 3.5%
• Only available in AZ, CA, DC, IN, FL, MI, MN, MS, NV, NJ, NY, NC, OH, OR, PA, SC, UT, VA, and WA

We selected Hometap as the best for flexible qualification because it has a low minimum credit score requirement of 500, it has no income requirements, and it allows you to receive an estimate without affecting your credit score.

About Hometap

Hometap was founded to make homeownership less stressful and more accessible. It offers home equity investments that allow homeowners to free up cash from their home’s equity without taking on additional debt.

Established to provide new ways to access home equity, Hometap targets homeowners with greater than 25 percent equity in their property. This could include those seeking to fund renovations, education, or consolidate debts.

Focusing on home equity investments, Hometap offers an alternative to traditional home equity loans and reverse mortgages. Its services provide a financial option that bridges the gap between loans and personal financial goals, offering flexibility and control.

How does Hometap work?

​​Hometap’s home equity investment (HEI) is a financial product distinct from a traditional loan. Through an HEI, homeowners can get cash from the equity they have in their home in exchange for a share of their home’s future value. Unlike a loan, there are no monthly payments or debt. 

In this way, Hometap essentially co-invests in your home. At the end of the investment term, the amount you owe, known as the “Hometap Share,” is determined by several factors, including your home value, the size of the investment, its change in value over the effective period, and the length of your investment. 

Here’s a detailed look at these terms:

• Investment amount: You can get a maximum of $600,000 (it will depend on home value and equity percentage)
• Term length: 10 years. This is the time frame in which homeowners must settle their investment with Hometap by paying back Hometap’s share, but you can do it faster without penalty. 
• Repayment options: To repay Hometap’s share, you can sell your home, refinance, or buy out Hometap using a loan or savings. 
• Repayment amounts: Homeowners typically take out 10% of their home value at the start of the investment. This means that those homeowners would owe between 15% to 20% of their final home value at the time of settlement, depending on how long the investment is held. Hometap’s share is capped at 20% of the annualized rate of return on the investment amount.
• Unique features: Hometap assigns you a dedicated investment manager who walks you through the process. Homeowners can also access the Home Equity Dashboard, which allows you to see your home’s current and estimated future equity, explore different appreciation scenarios, and forecast the cost and return on investment for various home renovations.

Who’s eligible for a Hometap home equity investment?

Hometap offers home equity investments to homeowners who meet specific criteria. If married, spouses typically must be included on the application, ensuring legal and financial obligations are clear for all parties involved.

Here’s a detailed look at the eligibility requirements:

Requirement	Details
Properties	Single-family, condos/apartments, multi-family (1 to 4 units), manufactured home
States	AZ, CA, DC, IN, FL, MI, MN, MS, NV, NJ, NY, NC, OH, OR, PA, SC, UT, VA, and WA
Max. LTV	75%
Min. credit score	500
Min. income	None
Max. DTI	None

How do you repay a home equity investment from Hometap?

Repaying a home equity investment from Hometap differs from repaying a traditional loan. Unlike a loan, you’ll have no monthly payments. Factors such as home value, its change in value over the term, and the length of your investment determine what you owe.

Here are key points about repayment to know:

Term length

The term length for your Hometap investment is 10 years, meaning by the end of this period, homeowners must settle the investment by paying Hometap’s share of your home’s value. This term is the same for everyone, but you can pay off the investment early and potentially reduce your total payment. 

Payment options

You can pay this share in multiple ways, including selling your home, refinancing, or buying Hometap out using savings or a loan. There are no options for partial payments; it must be one lump sum.

Overall payment

The amount you repay is linked to your home’s value when you submit payment. If the property appreciates, the cost may be higher, and vice versa. The percentage of your home’s value Hometap receives doesn’t change—it’s just a higher total amount if the value of the home is higher. 

Many homeowners typically take out 10% of their home value at the start of the investment. This means those homeowners would owe between 15% to 20% of their final home value at the time of settlement, depending on how long they hold the investment (see the “How is final payment calculated?” section below for more details and examples).

How much does Hometap cost?

Understanding the cost of Hometap’s home equity investment includes knowing the fees and how the final payment is determined. Here’s what you need to know:

Fees

Hometap charges one fee when it invests in your property: 3.5% of the investment amount for arranging and funding the investment. It deducts this from the investment total.

Appraisal, escrow, attorney or notary, and document recording costs are deducted from the investment amount when you receive your money. Hometap will provide a detailed estimate with final costs after you submit an application. Here’s what you can expect:

• Appraisal—$300 – $1,000 (varies by state and property): A third-party home appraisal determines the market value of your home. 
• Title charges—$700 – $800: This includes attorney or notary costs, settlement fees, and property report production.
• Government recording and transfer charges—$370 – $1,000: This includes filing fees. 

Hometap doesn’t charge any other fees, but it’s essential to consider these charges as part of the overall investment cost.

How is the final payment calculated?

How the final payment with Hometap is calculated and the percentage Hometap receives depend on your home’s value when you settle your investment and whether the value increases, decreases, or stays the same. It seems complicated, but examples can help you see how it all works.

The first thing to know is that if your home’s value goes up or stays the same, it pays to settle your investment faster. If you were to take out an investment equal to 10% of your current home value, and then settle in:

• 0 – 3 years: Hometap gets 15% of your home’s future value.
• 4 – 6 years: Hometap’s share goes up to around 17.85%.
• 7 – 10 years: Hometap will get 20%.

If your home’s value goes down: Hometap’s share remains at 15%, no matter when you pay.

Here’s an example to make it clearer:

Say your home is worth $500,000 when you start, and you take out a home equity investment of $50,000 (10% of your home value at the time of investment). 

Your home’s value goes up by 2% each year. Here’s how the numbers would change based on when you settle the investment:

	3 years	6 years	10 years
Home value	$530,604	$563,081	$609,497
Your share	$451,013	$462,965	$487,598
Your percentage	85%	82.2%	80%
Hometap’s share	$79,591	$100,116	$121,899
Hometap’s percentage	15%	17.8%	20%

But what if things don’t go as planned, and your home’s value drops by 5% during your investment term? Hometap gets 15% of your home’s value regardless of the settlement time frame.

Another item to note about the Hometap payment structure is the “Hometap Cap.” It’s a safety net that ensures Hometap’s share won’t exceed a 20% annualized rate of return on the original investment amount.

Here’s when this cap might come into play in our example of a home originally worth $500,000 and a homeowner receiving a $50,000 investment from Hometap:

Scenario	Home’s value	Your share	Hometap’s share (capped)
Settle in 1 year with a 2% value increase	$510,000	$450,000	$60,000 (20% return on $50,000)
Settle in 1 year with  5% value decrease	$475,000	$415,000	$60,000 (20% return on $50,000)

In the above examples, even if your home’s value increases by 2% or loses value by 5% and you settle in just one year, Hometap’s share is capped at $60,000. This offers a layer of clarity and control to the investment, allowing you to better predict the potential outcomes.

Does Hometap have any control over my home or its condition?

Hometap’s relationship with homeowners is defined by specific terms that allow flexibility while maintaining clear boundaries. Hometap doesn’t exert control over how you live or what you do with your property. But there are considerations worth understanding:

Renovations and home projects

• You may use the funds from Hometap to renovate your home. You’re the owner, and you decide how to allocate the money.
• You can also use personal funds for renovations without Hometap’s permission.
• If you decide to renovate and the changes increase the home’s value by $25,000 or more, you may request an adjustment to the agreed home value. If approved, the adjustment will reflect the difference between the appraised value of the property post-renovation and the hypothetical value of the property without the renovations. In other words, you get to keep the increase in home value from the renovations—they are not included in Hometap’s share.

Maintenance and condition

• Hometap has no special conditions regarding home maintenance, though maintaining its value is to your advantage.
• Inspections by Hometap are not standard practice. While inspections are not conducted randomly during the term, an appraisal will be needed if you settle without selling the home.

Pros and cons of Hometap

Before considering Hometap for your home investment needs, it’s beneficial to weigh the pros and cons. This section provides an objective analysis that might help in making an informed decision.

Pros

• Lower minimum credit score

  Hometap requires a minimum credit score of 500, which is lower than competitors such as Unlock at 550 and Unison at 620. This broadens accessibility to more homeowners.

• Higher cash limit

  The company offers a higher cash limit of $600,000, exceeding Splitero’s and Point’s cap of $500,000.

• Easy process and good customer support

  Customer reviews show users find the application process straightforward and appreciate the customer service Hometap provides.

• No home inspections required

  An appraisal is done, but you’re not subject to recurring home inspections during the term.

• Soft credit check

  You can determine your eligibility for a Hometap investment without affecting your credit score.

Cons

• Somewhat rigid terms

  The standard 10-year term requires you to pay Hometap’s share in a lump sum within that time frame, unlike Unlock, which offers partial buyout payments.

• Limited availability

  It only operates in 16 states.

• Long process time

  Hometap’s process might not be suitable if you need fast funds because it can take three weeks or more to get your investment. You might consider a faster-funding home equity loan or home equity line of credit in this situation.

Is Hometap a reputable company?

Customer reviews can shed light on a compay’’s reputation, and various platforms have provided insights into Hometap’s standing.

Source	Overall rating	# of reviews
Trustpilot	4.9/5	3,266
Better Business Bureau	3.9/5	29
Google	4.1/5	108

The overall consensus from these sources points to Hometap as a reputable company, with strong marks for customer service and ease of process. Some customers noted delays in finalizing agreements, but the general trend remains positive. 

It’s essential to consider these reviews. Platforms such as Trustpilot and BBB ensure authenticity in their ratings. However, potential customers should also conduct personal research and consult with a financial professional for a comprehensive understanding of what Hometap offers.

Does Hometap have a customer service team?

Hometap assigns a dedicated investment manager to guide customers through the process of setting up the initial investment. This investment manager acts as a dedicated customer service representative, providing personalized support and assistance throughout the term of the investment. 

Whether it’s questions about the investment itself or general customer service inquiries, the investment manager is there to help. Also, the main customer service team is at the headquarters and offers various channels of communication to ensure accessibility and convenience.

Here’s how you can reach Hometap’s customer service:

• Email:
  • Prequalification questions: [email protected] 
  • Active investment questions: [email protected] 
• Phone number: Call toll-free at 855-223-3144
  • Monday through Thursday: 8 a.m. – 8 p.m. Eastern
  • Friday: 8 a.m. – 5 p.m. Eastern
• Chat box: Available on the website for immediate assistance

How to apply for a Hometap home equity investment

Applying for a Hometap home equity investment is designed with user convenience in mind. As with many companies in this space, Hometap offers a prequalification process that doesn’t hurt your credit score. 

The proprietary model provides a comprehensive financial profile beyond a credit score. 

Here’s a step-by-step guide to applying for a Hometap home equity investment:

1. Request an estimate: See if you prequalify online in seconds.

2. Complete an application: If it’s a mutual fit and you decide to move forward, you fill out a quick online application.

3. Speak with your investment manager: Hometap will assign you a dedicated investment manager who will call to review all the details and guide you through the process.
4. Schedule your appraisal: Hometap may require a physical or digital appraisal of your property and additional necessary documentation during the review phase.
5. Sign and receive your funds: Once everything is finalized, a notary comes to your investment property for an in-person signing. After a three-day rescission period, disbursement begins, and you’ll typically receive your investment amount via wire transfer within four to seven business days.

The signing costs are deducted from the investment total, ensuring no out-of-pocket expenses. No payment is required until you sell the home or settle the investment within the 10-year period.

What if I’m denied a home equity investment from Hometap?

If Hometap denies a potential homeowner’s application, the reasons could include high existing debt or insufficient equity in the home. Understanding these reasons can be key to finding an alternative solution.

For those who have been declined, the following resources and options may be helpful:

• Best home equity investments: Explore our list of the best home equity investment and sharing agreement providers who may have different criteria and flexibility.
• How to take equity out of your home: Perhaps home equity investment is not right for you. This guide can aid in understanding other methods for leveraging your home equity. 
• Best home equity loans: Another option could be a home equity loan. Compare various home equity loan providers and their offerings.
• Best home equity lines of credit (HELOC): Similarly, a home equity line of credit could be an option. Review different lines of credit and find one that suits your needs.
• List of home equity companies: Access our comprehensive list of home equity loan, HELOC, and home equity investment providers. 
• Seek professional guidance: Consulting with financial professionals may lead to actionable improvements in areas that led to denial.
• Consider reapplying: If circumstances change, such as improving home value or reducing debt, reapplying with Hometap may be an option.

Being proactive in addressing the issues that led to denial, coupled with utilizing available resources, can open up new opportunities for securing a home equity investment.

How do other home equity products compare to Hometap?

Hometap’s home equity investment offers a unique solution for homeowners compared to other traditional products such as HELOCs, home equity loans, and reverse mortgages.

• HELOCs and home equity loans: Unlike Hometap, HELOCs and home equity loans involve borrowing against the equity in the home. HELOCs provide a revolving line of credit, while home equity loans offer a lump sum. Both typically come with interest rates and monthly payments. Hometap, on the other hand, provides cash upfront without any monthly payments, as it receives a percentage of the future home value instead.
• Reverse mortgages: This option allows older homeowners to convert part of their home’s equity into cash without selling the property. While similar to Hometap in the sense of receiving cash without monthly payments, reverse mortgages often have age restrictions and can carry hefty fees. Hometap does not require the homeowner to be of a certain age, and its terms may be more transparent.
• Other products: Some other providers offer shared equity agreements similar to Hometap but might have different terms and criteria for qualification. Always compare the specific details to ensure the best fit for individual needs.

Here’s a quick comparison:

Product	Interest payments?	Terms
Hometap (home equity investment)	No	10 years
HELOC	Yes	Varies
Home equity loan	Yes	Fixed
Reverse mortgage	No	Varies

By understanding these different options, homeowners can make an informed decision on which product is best suited to their individual financial needs and circumstances.

Hometap FAQ

How long does it take to receive funds from Hometap?

After submitting an application with Hometap, the entire process can take three weeks or more to finalize. This includes the home market value determination, finalizing the offer, structuring the investment, and signing. 

Once all details are finalized and the signing is complete, the disbursement begins. You can typically expect to get funds within four to seven business days of signing the investment agreement.

Do you need to tell Hometap what the funds are used for?

No, Hometap does not require homeowners to specify what they’ll use funds for during the application process. The usage of the funds does not affect eligibility for a home equity investment with Hometap. 

The main concern for Hometap is the property’s value and the homeowner’s financial profile rather than the intended use of the funds.

Are there any tax implications for using Hometap?

A home equity investment from Hometap does not have immediate tax implications when the equity is exchanged. Unlike traditional loans where interest may be deductible, a home equity investment is an exchange of equity for cash and not considered taxable income. 

The impact when the investment is repaid can vary, and homeowners should consult with a tax professional to understand the specific tax implications for their situation.

What if I don’t have the funds to settle my investment at the end of my Hometap term?

If a homeowner doesn’t have the funds to settle the investment at the end of the Hometap term, they may need to consider options like selling the home, refinancing, or obtaining a loan. 

What happens if my home is damaged or destroyed during the term?

If the home is damaged or destroyed during the term of the investment, Hometap has specific procedures in place. If the property can be repaired and restored to its condition before the disaster using insurance funds or at the homeowner’s expense, that happens, and your agreement proceeds as usual.

However, if it cannot be repaired and restored, Hometap will use an appraiser to determine the value of the property before the disaster. Hometap will then take its share from the insurance proceeds, in the same way as if the property was sold. 

Homeowners should notify Hometap promptly and work with it and the insurance company to address the situation.

What happens if I die or become permanently disabled?

If the sole homeowner passes away, the obligation to settle the investment with Hometap flows to the estate, and the lien remains on the property. 

If there’s a second homeowner and one homeowner dies, the agreement remains unchanged, and there are no modifications to the terms with Hometap. 

It’s prudent for homeowners to consult with legal and financial experts to understand the full implications and to ensure proper planning for such circumstances.

How we rated Hometap

We designed LendEDU’s editorial rating system to help consumers identify companies that offer the best financial products. Our experts spend hours researching these companies to ensure our ratings are fresh and accurate.

Our most recent evaluation compared Hometap to several companies across several factors, including investment amounts, repayment terms, customer reviews, and fees. We weighted, scored, and combined each factor to produce a final editorial rating. This rating is expressed on a scale from 1 to 5, with 5 being the highest possible score. We round all ratings to the nearest tenth decimal place.

Product	Best for	Our rating
Hometap investment	Best Overall	4.8/5