Newfi Home Financing Solutions Review

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Best for mortgage safeguards

• LendEDU rating: 4.4 out of 5
• More consumer safeguards and potentially lower costs than many home equity sharing alternatives because it’s a residential mortgage product

Newfi’s home equity investment, known as EquityChoice, may be a solid option if you’re looking for a home equity product with built-in safeguards. It adheres to state and federal regulations and imposes limits on how much you can owe. 

If you pursue EquityChoice, you can expect a cap on your total repayment amount, regardless of how fast or how much your home appreciates. This can provide you with greater peace of mind than you may get with other, more expensive financing solutions. 

This Newfi mortgage review will explain how the EquityChoice product works, the pros and cons, and more.

About Newfi 

Founded in 2014 and based in Emeryville, California, Newfi is an online lender that offers a variety of standard mortgages, including 30-year fixed-rate mortgages and Federal Housing Administration (FHA) loans. In addition to home loans, the company specializes in refinancing as well as unique solutions you might not find elsewhere, such as jumbo loans, graduated payment mortgages, and self-employed income loans.  

Homeowners can also tap into their home equity with a Newfi second mortgage, cash-out refinance, or equity sharing agreement. The lender’s mission is to “find simple, innovative mortgage solutions to help Americans achieve their homeownership goals.” It aims to accomplish this through competitive rates, faster closings, and complete transparency. 

According to the Newfi website, the lender has helped more than 3,000 customers across 40 states. It can be a solid choice for anyone who is looking for a mostly digital loan experience as well as those who would like access to a variety of mortgage products and resources. 

How does Newfi work?

EquityChoice, Newfi’s shared home equity mortgage, can allow you to access your home equity at a below-market fixed rate. You may borrow up to 16% of your home equity with a loan of up to $500,000—with no monthly payments. Once you receive the funds, you can put them toward virtually any expense, such as a rental property, home improvement project, or college. 

If your home value increases, you’ll owe a portion of your home’s future appreciation in addition to principal and interest. But if it decreases, you’re only responsible for principal and interest. The most you’ll owe in fixed interest and shared appreciation is capped by the laws in your state.

You must repay your loan after you sell your home or after your specified term comes to an end, whichever happens first. In addition, Newfi has no prepayment penalties, and you may qualify for tax benefits, depending on how you use the funds.

Here are Newfi’s terms:

• Loan amounts: $85,000- $500,000
• Term length: Depends on your agreement 
• Repayment options: Can repay the loan after you sell your home or your specific term ends
• Unique features: No monthly payments, no prepayment penalties 

Who’s eligible for a Newfi home equity investment? 

You may be eligible for a Newfi home equity sharing agreement (aka a home equity investment) if you’re a homeowner with a mortgage and at least 50% equity in your home. 

You should also have a minimum FICO credit score of 680 and prove that you’ve lived in the property as your primary residence for at least two years. In addition, you must have access to liquid reserves, assets, or income to show you can repay your loan.

Requirement	Details
Properties	Primary residence
State of residence	Every state except New York
Minimum credit score	680
Home equity	At least 50%

You can use the free EquityChoice calculator on the Newfi website to find out how much you may qualify for, without any impact to your credit. Just fill in where you live, your estimated property value, your current mortgage amount, and your FICO score. If you check your eligibility and decide to proceed, you can fill out an online form to start the formal application process. 

EquityChoice can make sense for many homeowners, but Newfi doesn’t recommend it if you’re a new homeowner, have less than 50% equity in your home, own your home free and clear, or plan to sell or move within the next five years. You should also consider alternative options if you’re a short-term real estate investor, like a house flipper.

How do you repay a home equity investment from Newfi?

With a Newfi home equity sharing agreement, you won’t make monthly payments, like you would with a standard mortgage or home equity loan. Instead, you’ll repay your loan once you sell your house or the specific term in your agreement ends.

You may pay back what you owe with the proceeds from your home sale, savings, real estate income, cash from refinancing, or other investment accounts. The amount you owe will depend on whether your home value increases or decreases. 

If it goes up, you’ll pay a portion of your home’s future appreciation plus principal and interest. In the event it goes down, you’ll only repay the principal and interest.  If you’d like, you can repay your loan early; Newfi doesn’t assess a prepayment penalty. 

How much does a Newfi mortgage cost? 

Your loan-to-value (LTV) ratio will dictate how much future appreciation you’ll share. In general, the more you borrow, the more you’ll owe. Here’s a look at the home appreciation interest share you can expect, based on your LTV:

• 5% LTV: 15% 
• 10% LTV: 30% 
• 15% LTV: 45% 

You’ll also pay appraisal fees, property inspection fees, and an origination fee of 3% of the loan amount at closing. You can finance the origination fee into your loan, but the appraisal and property inspection fees must be paid out-of-pocket.

How is the final payment calculated?

A third-party appraisal will determine the value of your home before you receive a Newfi home equity sharing agreement. 

Your final payment will depend on whether your home value increases. 

• ⬆️ If it goes up, you’ll pay a portion of its future appreciation (based on your LTV) as well as principal and interest. 
• ⬇️ If it goes down, you’ll only cover the principal and interest payments. 

A cap applies to the total amount you’ll owe, which is determined by your state.

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

Newfi doesn’t have direct control over your home. When you apply for EquityChoice, an independent third-party appraiser will estimate your home value and come to an appraised value. This amount is reduced by about 5% to account for market volatility and appraisal variance. 

Newfi gets a percentage of your home’s future value, but it’s up to you how you use the funds. According to Newfi, many customers use EquityChoice to invest in real estate, start a business, improve their homes, cover college, consolidate high-interest debt, or replace expensive credit lines.

You may continue to live in your home and take advantage of any homeowner tax benefits that might apply to you. As with any other home loan product, you must maintain your property and pay for property taxes and insurance.

Pros and cons of EquityChoice, Newfi refinance mortgage

Before you move forward with EquityChoice, it’s smart to consider the benefits and drawbacks of this product, including:

Pros

• Mortgage safeguards

  Because EquityChoice is a residential mortgage product, more safeguards apply to it than many other home equity investment products.

• No monthly payments

  You won’t need to budget for repayments every month. Instead, you’ll owe a final payment when you sell your home or your term ends, whichever occurs first.

• Use the funds for any expense

  Once you get the cash, you can put it toward any expense you’d like. Whether your goal is to consolidate high-interest debt or remodel your kitchen, EquityChoice can help.

• Competitive interest rates

  You will owe interest that compounds on a monthly basis, but it’s at a below-market fixed rate. This can lead to substantial savings over time.

Cons

• Requires sufficient home equity

  You’ll need at least 50% equity in your home to take advantage of EquityChoice. If you recently moved in or haven’t made much headway on repaying your mortgage, you might not qualify. 

• You won’t know the total cost until the end

  Because the amount you owe depends on future appreciation or depreciation, you won’t be able to budget for your final repayment in advance. A cap will apply, which you can find out beforehand.

• Risk of foreclosure

  Just like other home equity products, like home equity loans and home equity lines of credit (HELOCs), a home equity sharing agreement is tied to your home. If you don’t repay it like you agreed to, your home may go into foreclosure. 

If you’re not sure whether Newfi is right for you, consider other home equity companies.

For other companies that offer home equity sharing agreements, check out the following companies we’ve reviewed.

Lender	LendEDU rating (out of 5)
Unlock	4.7
HomeTap	4.6
Point	4.7

If you’re not sure a home equity sharing agreement is right for you, traditional home equity options can be more cost-effective in the long run. 

Consider these alternatives:

• Home equity loan
• Home equity line of credit
• Cash-out refinance

How we rated Newfi

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 each year to ensure our ratings are fresh and accurate.

Our most recent evaluation compared Newfi to several companies across a number of factors, including cash offers, repayment terms, customer reviews, and fees. We weighted, scored, and combined these factors 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 take
Home equity investment	Mortgage safeguards	4.4 out of 5	Check your offer