Question 1

How does a Home Equity Investment (HEI) work?

Accepted Answer

An HEI provider gives you an upfront cash advance in exchange for a percentage share of your home's future value. Unlike a home equity loan, there are no monthly payments, but you must pay back the share (usually at a premium) at the end of the option term (typically 10 years) or when you sell the property.

Question 2

Why is the equivalent APR on an HEI so high?

Accepted Answer

Because the HEI provider's share applies to the entire future value of the home, not just the money they advanced. If your property appreciates 4-6% annually, the dollar value of their share spikes exponentially, translating to an equivalent APR that often exceeds 15% to 25%.

"No monthly payments" — what does this deal actually cost?