1. What is Home Equity Agreement?

A Home Equity Agreement (HEA) is a financial arrangement where a homeowner sells a percentage of their home's future appreciation to an investor in exchange for immediate cash, without taking on monthly payments or interest.

2. How Does the Calculator Work?

The calculator uses the Equity Share formula:

Where:

• \( Agreement\ \% \) — Percentage of home equity being sold
• \( Home\ Value \) — Current market value of the property

Explanation: This calculation determines the immediate cash amount the homeowner receives based on the agreed percentage of their home's current value.

3. Importance of Equity Share Calculation

Details: Accurate equity share calculation is crucial for homeowners to understand the financial implications of selling a portion of their home's future appreciation and for making informed financial decisions.

4. Using the Calculator

Tips: Enter the agreement percentage (typically between 5-25%) and the current market value of your home. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical agreement percentage range?
A: Most home equity agreements range from 5% to 25% of the home's current value, depending on the provider and homeowner's needs.

Q2: How is home value determined?
A: Home value is typically determined by a professional appraisal or automated valuation model (AVM) to ensure fair market pricing.

Q3: What are the repayment terms?
A: Repayment occurs when the home is sold, typically within 10-30 years, based on the appreciated value of the equity share sold.

Q4: Are there any monthly payments?
A: No, home equity agreements do not require monthly payments. The investor receives their share when the property is sold.

Q5: What happens if the home value decreases?
A: Most agreements include protection where investors share in both gains and losses, though terms vary by provider.