One of the benefits of owning a home over renting is homeowners are able to build equity. However, actually getting access to that equity can be difficult, especially if you’re not ready to sell your home yet or you have a lot left on your mortgage. One way to unlock home equity early is with Home Equity Investments (HEI), where a third party gives you a loan against the future value of your home. This gives homeowners access to cash immediately, allowing them to pay down other debts, make other investments or finance home renovations to further improve its value.
One company helping homeowners unlock home equity early is Point, an HEI company that gives homeowners access to anywhere between $25,000 and $500,000 depending on their home’s value and mortgage. The company recently raised $115 million in Series C financing to scale its offerings and expand its presence nationally.
Point’s recent funding round was led by WestCap, whose founder and managing partner Laurence Tosi was one of Point’s angel investors in 2018.
“[I’m] thrilled to have Laurence A. Tosi, Joshua Dart and the entire WestCap team on board the Point rocket to help make homeownership more valuable,” Point co-founder Eoin Matthews said in a LinkedIn post. “We [have] a phenomenal team doing impactful work — I’m feeling very grateful for the opportunity to keep building.”
Point’s HEI process is fairly simple. First, the company evaluates a homeowner’s finances and makes a first offer for the loan. The company then values the home and depending on the appraisal will update its final offer. Once the deal closes, Point will fund the investment within a few days. According to TechCrunch, the average HEI Point makes is between 15 and 20 percent of the home’s property value. When Point does make an investment, the company isn’t added to the home’s title, meaning homeowners retain ownership despite the equity investment. It’s a little like venture capitalism but instead of backing a startup, Point is making an investment in a home’s future equity.
One thing that makes Point a good option for homeowners is there are no monthly payments on the loan and the company doesn’t expect to be paid back on its investment for 30 years. Since most people either sell their home or refinance well within that timeframe, that’s a pretty good-looking offer for those in need of cash fast. Depending on how the value of the home grows or shrinks, homeowners owe more or less to Point, with a cap on the amount if the value rises above a certain point.
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