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Startup Hometap wants to invest in your home equity

Wish you could tap your home equity but don't want to take on more debt? You may soon have another option.

Home equity investment startup Hometap has created a product that invests in properties alongside homeowners, announcing today its launch in Massachusetts with plans for near-term growth.

Seizing on the idea that a growing number of house-rich, cash-poor homeowners will want access to their equity, Hometap provides access to as much as 20% of their home's value in cash for a 10-year term, after which you can pay out Hometap's investment (which includes their return) by selling the house, using their savings or refinancing.

The investment structure and fees vary per property, and homeowners must first complete an online investment inquiry and undergo an appraisal. Hometap's investor share is strictly related to the sales price, and in the event the home value declines, Hometap's share will also decline.

The terms of the investment require that homeowners pay their mortgage, homeowner's insurance and property taxes, and keep the home in good repair. But otherwise, homeowners have no obligation to Hometap other than to loop them in if they decide to adjust their mortgage or sell the house.

"For us, it's really about rewarding a homeowner for what they've been able to accomplish," Hometap CEO Jeffrey Glass told HousingWire. "They have built up equity, they have dutifully paid their mortgage, they were smart enough to invest in their home, and now it has more value than when they started.

"We're really serious about our mission to make homeownership less stressful, and we're excited about the ability to bring something to market that solves a problem and creates a real opportunity for tens of millions of homeowners who find themselves in this position where they've got all this built-up equity, so they're house-rich, but yet their daily lives are pretty stressful," Glass added.

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