Alternative Ways to Get Equity Out of Your Home

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Alternative Ways to Get Equity Out of Your Home

Traditional home equity products, like home equity loans and home equity lines of credit (HELOCs), are often used by homeowners to get cash out of their property to fund things like renovation projects, home repairs, or debt payments. But they aren’t the only options to consider. 

A Home Equity Agreement (HEA) could be a great option for those who don’t want to add to their existing debt load or have an additional monthly mortgage payment. 

Unlock Your Home Equity

Traditional Options to Access Home Equity

Here’s an overview of traditional home equity products commonly used by homeowners: 

Home Equity Loans

You can borrow up to 85 percent of your home’s value minus the outstanding mortgage loan with a home equity loan. So, if your home is worth $385,000 and you owe $295,000, you could potentially qualify for up to $32,250 ($385,000 * .85 – 295,000). 

Loan proceeds are dispersed in a lump sum, and there are no restrictions on how they can be used. You’ll also get a fixed interest rate and make equal monthly payments over a set period. 

Home equity loans act as a second mortgage, so you won’t have to refinance your existing home loan. It’s equally important to know that your home could be at risk if you fall behind on loan payments. 

Home Equity Lines of Credit (HELOC)

HELOCs and home equity loans are similar but have a few key differences. You’ll get a pool of cash to draw against for a set period (or draw period) with a HELOC. But if you get a home equity loan, the lender distributes the entire amount to you at closing. 

Interest-only payments for the amount you withdraw are required on HELOCs during the draw period. When it ends, monthly installment payments for principal and interest begin and can fluctuate over time. 

The significant variance is the interest rate – HELOCs generally come with variable interest rates, and home equity loans have fixed interest rates. 

HELOCs are ideal for homeowners who prefer a pool of cash to borrow against as needed for a set period. You’ll only be on the hook for the amount you borrow and have control over the monthly payments. 

Reverse Mortgage

Reverse mortgages are available to homeowners at least 62 years of age who want to tap into their home equity. You can choose from a fixed-rate reverse mortgage or an adjustable-rate reverse mortgage. 

Fixed-rate reverse mortgages disburse loan proceeds as a lump sum. However, there are five disbursement options for adjustable-rate reverse mortgages: 

  • Term payments: receive equal monthly payments for a set period 
  • Modified term: receive access to a line of credit and equal monthly payments for a set period 
  • Tenure: receive equal monthly payments for a set period as long as you or your spouse live in the home 
  • Modified tenure: receive access to a line of credit and equal monthly payments for a set period as long as you or your spouse live in the home
  • Line of credit: receive payments as needed until you reach the borrowing limit

While they are a relatively straightforward way to help senior homeowners get cash, reverse mortgages are very risky. You could lose your home if you default on property tax and insurance payments, fail to make repairs mandated by your lender, or reside in a location outside of your home for most of the year. 

If you pass away and do not have a surviving spouse to maintain the home, your heirs could lose the home if they cannot pay the lender 95 percent of its appraised value. 

Cash-Out Refinance

Cash-out refinancing allows you to access up to 90 percent of your home’s equity minus the outstanding mortgage balance. Here’s how it works: Assume you owe $345,000 on a home that’s worth $500,000 and want to do a cash-out refinance to tap into the equity. If the lender approves you for 90 percent LTV, you will get $105,000 ($500,000 * .90 – $345,000) at closing. 

But here’s how it differs from home equity loans and HELOCs. Instead of repaying on a standalone home equity product or second mortgage, the lender will combine your outstanding mortgage balance and the cash you take out in a new loan that replaces your old one. The interest rate could be higher, and you’ll generally pay more each month. 

Homeowners who want to consolidate debt or fund steep home improvements generally find these products very attractive. Paying off debt frees up funds to meet other financial goals, and home renovations could substantially increase your property value. 

Unlock Your Home Equity

Alternative Ways to Get Equity Out of Your Home

Are you having trouble getting approved for a home equity loan, HELOC, or cash-out refinance? Or perhaps you’d prefer to explore debt-free options that allow you to convert equity to cash? Consider these alternatives to get equity out of your home. 


A sale-leaseback lets homeowners sell their property to an investor but continue occupying the home through a lease agreement. It’s a win-win for both parties – the investor can start earning rental income right away, and the lessee can turn a profit from the sale of the property without having to relocate. 

Home Equity Agreement

A Home Equity Agreement (HEA)may be best if you don’t want to add extra debt or take a loan. This product is an agreement between an investor and homeowner that grants the investor rights to a share in the profits at the time of sale in exchange for a cash payment today.

Unlock is a reputable company worth considering if you want to explore how a Home Equity Agreement works. Accredited by the Better Business Bureau (BBB), it offers investments up to $500,000. Residential properties that are both owner-occupied and non-owner-occupied could qualify if you have at least 20 percent in equity. 

Worried your credit score will be a hindrance? You could get approved for an investment with a minimum FICO score of 500 (but Unlock may request additional documentation to verify income if your credit score is on the low end). 

If you decide to move forward, you could get funds in just 30 days and use the cash at your discretion. You’ll have 10 years to either sell your home or buy Unlock out of the agreement – Unlock will receive their original investment plus their share of gains or losses in the property.

Use the online tool to gauge your eligibility for an alternative way of getting equity out of your home with an investment from Unlock. You can also schedule a call to speak with a representative and ask any questions you may have about the process.


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