Editorial rating: 4.4 out of 5
- No monthly payments
- No effect on debt-to-income ratio
- No income requirements
Based on our research, Point’s home equity investment rates a solid 4.4. It gives homeowners a way to leverage their home equity and access cash—without monthly payments. However, Point doesn’t earn a LendEDU best-for designation when we compare it to competitors.
Point’s home value risk adjustment stands out as a significant downside. Point applies a 25.5% to 29.5% risk adjustment to your home’s initial appraised value, which can be a substantial drawback for homeowners looking to tap into their home equity.
With its services limited to 26 states, many potential borrowers might find themselves ineligible purely based on geographical limitations. Stick around because we’re laying out the facts about Point home equity, ensuring you’re well-prepared to take the next step in your financial journey.
Founded in 2015, Point aims to make homeownership more accessible and financially flexible. Its mission is to give homeowners an innovative way to tap into their home equity without monthly repayments. By offering home equity investments (HEIs) rather than traditional loans, Point provides a unique financing solution.
The company targets homeowners seeking financial flexibility without taking on more debt. Whether you need to consolidate high-interest debts, renovate your home, or cover educational expenses, Point offers a no-monthly-payment solution that aligns with your home’s future value.
|Our take on Point’s home equity investment|
|Best for||No best-for designation|
|Editorial rating||4.4 out of 5|
|Prequalify in minutes.|
How does Point work?
Point offers a nontraditional way to access your home’s value through its home equity investment model. Unlike traditional home equity loans or lines of credit, Point acts as an investor in your property, not a lender.
This distinction is critical to understand the unique features and terms associated with Point’s product.
- Loan amounts: $25,000 – $500,000
- Term length: 30 years, no monthly payments
- Repayment options: Repay early without penalties
- Unique features: No monthly payments, no effect on debt-to-income ratio, no income requirements
With Point’s wide range of loan terms, you can choose an investment that fits your financial needs, whether you’re looking to make significant home improvements or consolidate debt. A 30-year term with no monthly repayments gives you financial flexibility.
Point recoups its investment when you sell your home or at the end of the term. If your financial situation improves, you can repay Point early without incurring any penalties.
Who’s eligible for a Point home equity investment?
Whether you own a single-family home, a condominium, a townhome, or a property with up to four units, Point could suit your needs. Even trust-held properties get the green light in certain cases.
|Properties||Single family, condominiums, properties with 1 – 4 units, townhomes|
|Trusts||Individuals in trusts can hold title in some situations|
|State of residence||26 eligible states (listed below)|
|Maximum loan-to-value||20% of home’s value; Must keep at least 20% equity after Point’s investment|
|Minimum credit score||500|
Eligible states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, Washington, D.C., and Wisconsin
How do you repay a home equity investment from Point?
With Point’s home equity investment, you’re not looking at monthly payments or immediate repayment obligations. You have 30 years to pay off the investment, which you can do when you sell your home or at the end of the term. If you sell your home within those 30 years, Point claims a share of the proceeds that corresponds with its investment.
Point offers a homeowner protection cap—a time-based maximum amount that seves as a buffer for those who see their home’s value skyrocket. This cap means you might keep a bigger slice of the profit when selling your home.
If the 30-year term concludes and you haven’t sold, you’ll buy Point out based on your home’s current market value. Various methods, such as a home equity loan or reverse mortgage, can fund this buyout.
How is the final payment determined?
Here are three repayment scenarios from Point’s website:
You can view explanations and more details about all three examples on Point’s website.
How much does Point cost?
Don’t mistake Point’s no-monthly-payment structure for a fee-free experience. You won’t make immediate out-of-pocket payments, but fees exist. For starters, Point charges a processing fee of up to 3.9% ($1,000 minimum) along with third-party fees such as appraisal, escrow, and government costs.
The company also applies a home value risk adjustment ranging between 25.5% to 29.5% on your home’s initial appraised value. This essentially means if your home’s value is $500,000, Point could consider it worth only $372,500 after risk adjustment. It also takes a percentage of your home’s future value as part of its investment.
Why does Point use a risk adjustment?
Point’s main goal is to invest in a property’s future appreciation. The adjustment allows it to mitigate the following risks inherent in its business model:
- Protect the investment: The risk adjustment—a percentage reduction in the home’s market value—is a buffer against potential future losses.
- Market fluctuations: Real estate markets can be unpredictable. The risk adjustment helps the company account for that volatility. If the housing market takes a hit, the adjustment offers protection.
- Homeowner responsibility: The adjustment can encourage the homeowner to keep the property in decent shape. But if the home doesn’t appreciate as expected, the company has the buffer of the adjustment.
The risk adjustment is a safety net to protect Point’s investment while giving the homeowner access to needed funds.
How is the final payment calculated?
The final payment you owe to Point isn’t static; it varies depending on several factors. For instance, if your home’s value increases, Point’s slice of the pie also grows. If the home value dips, you’ll owe point less.
Here’s more from Point about the above example:
Before you get the investment, Point assesses your home’s value through a comprehensive appraisal. At the time of repayment, Point will value your home in one of the following ways:
- If you’re selling your home, Point uses the sale price, assuming it reflects the market value.
- If you’re repaying through another source, Point assesses the property value via an appraisal, an automated valuation model (AVM), or a broker price opinion (BPO).
Does Point have any control over my home or its condition?
Point doesn’t hold any direct control over your home or its condition. You retain full ownership, and there’s no need to add Point to the title.
If you’re itching to renovate your kitchen or build that dream patio, you’re free to do so. Point doesn’t require you to ask for permission to undertake home projects. However, when you repay, Point won’t adjust the value of your home to exclude gains from improvements you made during your agreement.
This holds significant implications for homeowners. Point not adjusting the value of your home for improvements you’ve made means you might end up paying more than you’d like. If you renovate your kitchen and it adds $20,000 to the value of your home, that increase is also a boost to Point’s investment. When you repay, Point will take a share of that added $20,000 value—even though it didn’t contribute to the cost of the renovation.
Here’s how that affects you:
- In an equity sharing model like Point’s, the company shares the upsides and downsides of your home’s value changes. But if you invest personal money into improvements, Point benefits without sharing the cost.
- Your new kitchen might make your home more enjoyable, but from a financial perspective, you’re cutting into your own profits. You pay for the renovations and then share those gains with Point during repayment.
- If you plan to make significant improvements to your home, this might not be the most advantageous agreement for you. You could end up giving away more than you bargained for when it’s time to repay.
Point expects you to maintain your home in a reasonable state. It mandates inspections, but poor maintenance could lower your home’s value. You may owe Point less if your home’s value decreases, but you also stand to gain less from the sale or refinancing of your property.
How you maintain and improve your home can affect what you owe when it’s time to settle the investment.
Pros and cons of Point
No monthly repayments
This gives homeowners breathing room.
No need for a high credit score or a certain income level.
Early repayment flexibility
Pay off your investment early with no penalties.
Keep full ownership and control of your home.
You’ll owe Point a piece of your home’s value.
Point applies a significant risk adjustment to your home’s initial appraised value.
No renovation or remodeling adjustment
Point won’t exclude the value of renovations you complete from the amount you owe.
Services are available in only 26 states as of September 2023. (Excluded states listed below.)
Ineligible states: Alabama, Alaska, Arkansas, Delaware, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Rhode Island, South Dakota, Texas, Vermont, and West Virginia
Point has its advantages, making it an appealing choice for certain homeowners. But if you’re seeking alternatives, Unlock and Hometap rank highly in our reviews.
- Unlock shines as the best overall option.
- Hometap‘s more lenient qualification criteria might suit you better if you’re worried about credit scores.
- Unison rates 4.4—the same editorial rating Point earned—but as we mentioned above, it allows for a remodeling or renovation adjustment.
Is Point a reputable company?
When considering a home equity investment, customer reviews can provide valuable insight. They offer real-world experiences and can help you gauge what to expect in terms of customer service, speed of the process, and overall satisfaction.
|Source||Customer rating (out of 5)||Number of reviews|
|Trustpilot||4.5 (Excellent)||1,600 reviews|
|Better Business Bureau||4.26||182 reviews|
Ratings collected on September 13, 2023.
Point earns solid customer reviews, holding an “Excellent” rating on Trustpilot and an A+ rating from the Better Business Bureau (BBB). Trustpilot is an open platform that lets consumers share their experiences, providing a broad spectrum of customer opinions.
The BBB is a well-known organization that not only reviews businesses but accredits them based on several criteria, including customer feedback. The A+ rating from the BBB speaks to Point’s overall business practices and consumer trustworthiness.
Customers on both websites praise Point’s customer service, describing it as helpful and efficient. However, we noticed recurring themes in the negative reviews too: Several customers noted a longer-than-expected process to get the funds. Others pointed out the high cost associated with repaying the investment early.
Does Point have a customer service team?
When it comes to customer service, Point’s team has you covered. Whether you need help with servicing needs or have general questions, the team is there.
Here are ways to contact Point:
- Email: Fill out the contact form on the website for inquiries.
- Phone for servicing needs: 650-632-5040 (8 a.m. – 6 p.m. Pacific)
- Phone for general inquiries: 888-764-6823 (8 a.m. – 6 p.m. Pacific)
You can reach out using any of these methods.
How to apply for a Point home equity investment
Navigating the application process with Point is straightforward. Point offers the advantage of letting you prequalify for a home equity investment, which won’t ding your credit score. This gives you a sense of your terms before you dive into the full application.
Here’s how to apply for a Point home equity investment:
- Start prequalification: Click “Prequalify now” on Point’s website, and enter your home address.
- Estimate home value: Input your home’s value, comparing it to available Zillow estimates.
- Review offer: After providing the requested information, you’ll get Point’s initial offer. Review it carefully.
- Complete application: If you decide to proceed, fill out the full application and submit the required documents. These may include proof of income and ownership.
- Home appraisal: Point will schedule a home appraisal to assess your home’s current market value.
- Loan issuance: Upon successful appraisal and review, Point will issue the home equity investment.
The time each step takes can vary, but the initial prequalification can be almost instant. The appraisal and loan issuance could take several weeks. Be sure to have all your documents in order to expedite the process.
What if I’m denied a home equity investment from Point?
If you find yourself denied a home equity investment with Point, don’t lose hope. Point should inform applicants about the reasons for the denial, providing an opportunity to address these issues.
Point doesn’t state how soon you can reapply, but understanding the reasons behind the denial can guide you on improving your chances in the future.
Common reasons for denial might include:
- Low home value: If your home’s market value is lower than what Point considers viable, consider waiting for market conditions to improve.
- High debt-to-income ratio: If you have too much debt compared to your income, consider debt consolidation or paying down debt to improve your profile.
- Poor credit score: Point doesn’t require a high credit score, but an exceptionally low one could be a dealbreaker. While you work to rebuild your credit, pay all your bills on time, reduce credit card balances, diversify your credit mix, and check your credit report for errors. (Contact the credit bureau to correct any you find.)
- Property location: Point operates in just 26 states. If your home is outside these regions, consider alternative lenders such as Unlock or Hometap to see whether they’re available in your location.
With this information, you can make targeted improvements or seek alternatives that fit your financial situation.
How do other home equity products compare to Point?
Point offers a unique way to access your home’s equity, and it’s essential to understand how it stacks up against more traditional options, such as home equity loans (HELOCs), home equity loans, and reverse mortgages.
Unlike these conventional products, Point doesn’t require monthly repayments or have stringent credit score requirements. The repayment comes at the end of the term or when you sell your home, and it depends on your home’s future value. Point’s homeowner protection cap can shield you from massive repayments in case of a surge in your home’s value.
HELOCs and home equity loans, on the other hand, turn your equity into a credit line or lump sum payment, requiring regular monthly payments and interest charges. Reverse mortgages offer a way for seniors to tap into home equity, turning it into an income stream, but they often come with high fees and complicated terms.
Point provides an alternative for homeowners looking for a more flexible and potentially less burdensome way to leverage their home equity.
|Feature||Point home equity||Traditional home equity loans and HELOCs|
|Loan amounts||$25,000 – $500,000||Often up to 85% of home value|
|Term length||30 years||5 – 30 years|
|Repayment options||No monthly repayment||Monthly payments required|
|Fees||Up to 3.9% processing, plus third-party fees||Closing costs, possible origination fee|
|Unique features||No effect on debt-to-income ratio|
No income requirements
|May require good credit and proof of income|
|Eligibility||Properties in 26 states|
No need for excellent credit
|Many lenders are nationwide|
Higher credit score often required
|Effect on home ownership||Share in future home appreciation or depreciation||No share in home value, purely a loan|
|Early repayment||No penalties for early repayment||Possible prepayment penalties|
How long does it take to receive funds from Point?
After you complete the application process with Point and it has appraised your home’s value, you can expect the funding process to take several weeks. The length can vary based on the individual circumstances of your application, but generally, the process isn’t as quick as, for example, getting a personal loan.
Do you need to tell Point what the funds are used for?
Point doesn’t require you to state the purpose of the funds during the application process. Unlike a home improvement loan, where you might need to outline the intended use, Point allows more flexibility. Your use of the funds doesn’t affect your eligibility for the home equity investment.
Are there any tax implications for using Point?
Tax implications of using Point can be complex and vary by state and individual situation. Here are general points:
- Point pays taxes on its share of any appreciation, potentially reducing your capital gains if you sell your home.
- If you pay Point without selling your property, there’s no capital gains event, but there may be opportunities for other tax deductions.
- The initial funds from Point are tax-deferred.
It’s crucial to consult a tax advisor before making any decisions because your unique situation could affect your tax obligations.
What happens if my home is damaged or destroyed during the term?
If your home suffers significant damage due to unforeseen events, such as a storm, the terms of your agreement with Point will specify how to handle the situation. It’s essential to have adequate homeowners insurance to cover these types of events.
What happens if I die or become permanently disabled?
In the unfortunate event of death or permanent disability, Point’s agreement is assumable. It continues with the co-owner or the estate, and the terms remain the same for the heir of the estate. Death doesn’t trigger immediate repayment, giving the heir the same timeframe to repay as the original homeowner.
How we rated Point
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 Point to several companies across a number of factors, including cash offers, 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|
|Home equity investment||No best-for designation||4.4 out of 5||Check your offer|