Hometap Calculator

Home Equity Investment (HEI) Estimator

5 Years 10 Years (Max)

Estimation Results

Estimated Future Home Value: $0
Investor's Equity Share: 0%
Total Payoff Amount: $0
Total Cost of Capital: $0

*Note: This is an unofficial estimate. Home equity investments typically use a "share multiplier" where the percentage of equity given up is greater than the percentage of cash received. We've applied a standard 1.8x industry multiplier for this estimate.

function calculateHEI() { var homeValue = parseFloat(document.getElementById("homeValue").value); var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value); var investmentAmount = parseFloat(document.getElementById("investmentAmount").value); var annualAppreciation = parseFloat(document.getElementById("annualAppreciation").value) / 100; var termYears = parseInt(document.getElementById("exitYear").value); if (isNaN(homeValue) || isNaN(investmentAmount) || homeValue <= 0) { alert("Please enter valid numbers for home value and investment amount."); return; } // Standard industry share calculation (Cash/Value * Multiplier) // Most HEI providers take a larger share of future value than the cash % provided var shareMultiplier = 1.8; var percentageOfValue = investmentAmount / homeValue; var investorSharePercentage = percentageOfValue * shareMultiplier; // Calculate Future Value using compound interest formula var futureHomeValue = homeValue * Math.pow((1 + annualAppreciation), termYears); // Payoff is the investor's share of the future value var payoffAmount = futureHomeValue * investorSharePercentage; var costOfCapital = payoffAmount – investmentAmount; // Format numbers var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); var pctFmt = new Intl.NumberFormat('en-US', { style: 'percent', minimumFractionDigits: 1, maximumFractionDigits: 1 }); document.getElementById("futureValueResult").innerText = fmt.format(futureHomeValue); document.getElementById("investorShareResult").innerText = pctFmt.format(investorSharePercentage); document.getElementById("payoffAmountResult").innerText = fmt.format(payoffAmount); document.getElementById("costCapitalResult").innerText = fmt.format(costOfCapital); document.getElementById("resultsArea").style.display = "block"; }

Understanding the Home Equity Investment (HEI) Model

Unlike a traditional home equity loan or HELOC, a Home Equity Investment (often referred to as a Hometap-style investment) is not a loan. There are no monthly interest payments and no debt added to your credit profile. Instead, an investor provides you with cash today in exchange for a percentage share of your home's future value.

How the Calculation Works

The "cost" of a home equity investment is determined by how much your home appreciates over the term (usually 10 years). The logic follows these steps:

  • Equity Share: The investor determines a percentage of your home's value they will "own" at the end of the term. This is typically calculated by taking the cash amount provided divided by your current home value, then multiplied by a risk factor (the share multiplier).
  • Appreciation: As your home increases in value, the dollar amount represented by the investor's fixed percentage also increases.
  • The Exit: At the end of the 10-year term, or when you sell the home or refinance, you pay the investor their share of the home's current market value.

Real-World Example

Imagine your home is worth $500,000 and you want $50,000 in cash. In a typical HEI scenario, the investor might take a 15% to 18% share of the home's future value. If your home appreciates at 3% annually for 10 years, it will be worth approximately $671,958. At the 10-year mark, you would owe the investor 18% of that new value, which equals $120,952.

Who Is This For?

This financial product is specifically designed for homeowners who:

  1. Have significant equity (usually at least 25-30% remaining after the investment).
  2. Do not want additional monthly debt payments.
  3. May not qualify for traditional bank loans due to credit score or debt-to-income (DTI) requirements.
  4. Plan to sell or refinance within the next 10 years.

Important SEO Note: While HEIs offer liquidity without monthly payments, the effective "interest rate" can be significantly higher than a mortgage if your home appreciates rapidly. Always compare the total estimated payoff against traditional financing options.

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