US News & World Report journalist Emily Brandon wrote about San Diego, CA based Equity Key’s product which can be used as an alternative to a reverse mortgage. Equity Key’s product will provide a cash advance on a house in exchange for the right to share in the homes future appreciation. A typical borrower is able to receive 10-15% of their homes value in exchange for a 50% stake in the home’s future value. So while the homeowner might receive more money by using a reverse mortgage, Equity Key’s product doesn’t increase the borrowers mortgage balance. That’s seems like a steep price to us, whether its a Reverse Mortgage, Equity Key product or the REX Agreement.
Two other companies, REX & Co. and Grander Financial, also will pay you up to 10 to 15 percent of your home’s value for a stake in the future appreciation. They differ from EquityKey in that they impose no age limitations and require that the primary owner reside in the property. REX & Co. pays customers in two payments, one when the agreement is entered and one at the end of the agreement, typically when the home is sold. In some cases, homeowners may be required to repay if the home loses value.
The real question is what’s going to be the appreciation of home values in the next 2-3 years?