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For many Americans, their homes are their best and most valuable personal investments. However, for years the only way to use their equity in that investment was to tap that home’s value via home equity loans or home equity lines of credit (HELOCs).
Fortunately, homeowners have more options than ever to use their home’s equity to help them improve their financial positions. In addition to the advent of online banking and platforms specializing in these kinds of loans, homeowners also have access to innovative services like those offered by Point.
Let’s take a look at Point, so you can see whether or not their unique business model could be a good fit for you.
Onto our Point.com review!
What is Point? Shared Home Equity Financing
Point (Point Digital Finance) is a financial services company founded in 2014 and headquartered in Palo Alto, California. Unlike a traditional lender, Point will invest in a portion of the equity you currently have, via a deed of trust and memorandum of option on the house.
Point will provide you a payment for that amount, which can range from $35,000 to $350,000. When you eventually sell your home, you will be required to provide Point.com a portion of the proceeds based on the agreement you made to obtain your initial payment.
Since this essentially is a sales proceeds agreement and not a loan, you as a homeowner will not be required to make monthly payments and will retain significant control of the home as well.
- Shared equity home loan
- Debt-free home financing
- Fractional home ownership
- Responsible debt
- Wealth diversification
- Home equity loan alternative
- Mortgage alternative
- Zero monthly payments
- HELOC alternative
- HELOC refinancing – pay off your HELOC
- Reverse mortgage alternative
In order to be eligible for Point home equity, the home in question must be located in select areas of:
- New Jersey
- Washington DC
- New York
- North Carolina
Additionally, applicants must have sufficient credit and debt to equity as well. The home in question must be worth at least $200,000, and as the homeowner, you will need to retain at least 30% of the equity in your home after Point’s investment. Additionally, in some cases, Point may require the homeowner to retain even more equity.
How it Works
Although Point’s home equity investment product is considerably different than a home equity loan or HELOC, the online application process is similar. Applicants provide some basic information to Point on their website, which only takes a few minutes. Once the information is uploaded, Point’s automated system will let you know whether or not you are pre-approved and will provide you a tentative equity investment offer; that offer is typically in the range of 5 to 10 percent of your home’s overall value.
If you decide to proceed, you will then fill out a more detailed equity investment application. You’ll need to have your home appraised, after which Point will send you a final offer. Then, if you accept it, you will sign the Point Homeowner agreement, a Deed of Trust will be filed, and then a Memorandum of Option on the property will be completed. Following these actions, you will receive your funds from Deed within four days or so. Overall, successful transactions take about four weeks on Point.
RELATED: Shared Equity Mortgages.
Some More Fine Print on Homeownership
In most traditional scenarios for homeownership, you won’t be able to cash out all of your home’s equity until it’s fully paid off. Nonetheless, even if it takes a little bit of time to realize it, building up equity is a good deal for most people. In any case, recognizing it’s going to take a while to build up value, it makes sense to shop for a home that appeals to you. Inform a bank that you like the house and request funds to purchase it.
Then, once you buy your dream home, you’ll have to pay the bank back every year for decades before you’ve amassed enough equity in your home to do anything worthwhile with it. If you wish to take advantage of any of your home’s equity while you’re still paying off your mortgage, you will have to either refinance or obtain a home equity loan or home equity line of credit (HELOC). The issue is that any of these traditional equity tapping solutions will result in you accruing even more debt.
What if, instead, you could get a lump sum of money equal to a fraction of your home’s equity to cover urgent financial obligations? That is exactly what Point aims to accomplish. You will never have to pay Point back in monthly payments if you use the platform to get cash from your home’s equity. You may, however, terminate the transaction at any time before the conclusion of the 30-year period.
If your home appreciates in value, you will repay Point the lump money as well as a percentage of the current value of your home. On the other hand, if the value of your property decreases, Point will share in the loss as well. Unlike a standard home equity line of credit, you receive a flat sum of cash and do not have to make monthly payments with Point.
Point does not become a co-owner of your property if you sell shares in your home equity to them. When you elect to discontinue the agreement, they are just a partner in the home’s value change. Just like a traditional lender, the platform uses a Deed of Trust to protect their interest in the property.
Point is available in the following states:
- New Jersey
- Washington, D.C.
- New York
- North Carolina
Point Customer Service
Customers who want to contact Point can do so via the following options:
- Phone: 888-764-6823 hours are MON-THUR 6 am – 6 pm PST, FRI 6 am – 4 pm PST. Closed on Saturdays and Sundays
- Email is [email protected]
- Points Mailing Address is P.O. Box 192, Palo Alto, CA 94302
Point has a rating of 4.4 stars with 199 reviews on Trustpilot, which is an excellent score. Of those reviewers, 68 percent of them gave Point an excellent review, while only 6 percent rated the company’s services as bad. Additionally, Point has been accredited with the Better Business Bureau since 2015, and currently carries an “A+” rating with the BBB.
Point.com Pros and Cons
There are several pros and cons to consider before opting to use Point; here are a few of the most important ones.
- No Monthly Payments. Since Point’s equity investment is not a loan, you won’t be saddled with monthly payments like you would if you had gone the traditional route and obtained a HELOC or home equity loan.
- Liberal Credit Requirements. While Point does require you to meet some credit rating and debt-to-equity thresholds, their program is considerably more forgiving than comparable home equity and HELOC application requirements.
- Simple Application Process. Applying for Point’s program is simple and, other than the appraisal, can be done entirely online.
- Control. In order to obtain funding from Point, you will have to agree to have a deed of trust on your property; this could limit some of the control you have to make decisions about your property such as renting, renovating or refinancing it.
- Unclear Buyout Terms. It can be difficult at times to ascertain exactly how much money you would need to buy back Point’s share in your home’s equity.
The primary alternatives to Point are traditional and online lenders offering HELOCs, home equity loans personal loans, and reverse mortgages. You should definitely review the pros and cons of all of these options before determining the best way to access and use your home’s equity.
Point mortgage alternative competitors:
Shared Equity With Point.com: Point.com Review Parting Thoughts
If you need to access your home’s equity, Point is definitely an innovative and unique option to consider. While Point’s services have some clear drawbacks, they could be a good fit for your current financial situation. So, check out what Point has to offer, and see if their services will work for you.
Find Out If You Qualify With Point.com
Get up to 350k with no monthly payments, ever
Enjoy our Point.com review?
You may also be interested in Haus Co-Investing Mortgages.