Hometap vs. Point [2024]: Is Selling Your Home’s Equity Smart?

Hometap vs. Point

Here’s an overview of how Hometap compares to Point.

	Hometap	Point
Equity amount available	Maximum of $600,000	Maximum of $500,000
Fees	3% of investment plus third-party fees, including the cost of a home appraisal	Depends on how much the home appreciates or depreciates
Term	Up to 10 years	Up to 30 years
Max loan-to-value ratio (LTV)	75%	Less than 80% (Must have enough equity in the home to retain 20% after Point’s investment)
Credit score needed to qualify	500 (typically over 600)	500
Prepayment penalty	None	None

When to choose Hometap

Hometap and Point are both investment products, but choose Hometap if you:

• You need to tap into 25% of your home’s value
• You plan to sell your house in less than ten years
• You plan to make home improvements

You need a slightly larger amount of cash

Hometap allows homeowners to tap into up to 25% of their home’s value minus any outstanding loans, versus Point’s 20% max. On a $500,000 home, that’s a difference of $25,000. This can make a tremendous difference if you have big plans for the funds.

You have short-term plans to sell your home

The term for Hometap is only ten years. While that doesn’t mean you must sell your house at the ten-year mark, you will have to make a decision. You can either sell the house before then or buyout the investment by taking out a home equity loan or using your savings.

If you don’t have plans to move within the next ten years, you should consider your alternatives because borrowing money to buyout the investment could be expensive and challenging.

You want to improve your home in the future

If you have big dreams and plan to renovate your home, the Hometap doesn’t take any share of the appreciation that has to do with home renovations, according to the home appraiser. This is good news if you plan to make major improvements that have a good ROI.

When to choose Point

• You plan to be in the home for more than ten years
• You own your home without any liens

You have longer-term plans

Point doesn’t require repayment for 30 years, which gives you a much longer timeline to decide what to do with your house. If you don’t have short-term, concrete plans to sell your house, Point allows you the opportunity to tap into your home’s equity without feeling forced to sell it soon or get another loan.

You have 100% equity

Point immediately knocks off as much as 20% of your home’s value off it before determining how much you can borrow. This is their “safety net” but it lowers the amount you can borrow. If you also have a first lien on the property, you may be disappointed in how much you can borrow. But if you own your home lien-free, there’s more room to get the funds you need.

Key differences

While their basic service is very similar, there are some distinct differences when comparing Hometap vs. Point.

Term of contract

Hometap has a 10-year term, while Point has a 30-year term, providing more time for homebuyers to repay the money.

Winner: Point because you get much more time to decide what to do with your house moving forward.

Ability to borrow additional money

If you need more money at a later date, Hometap may allow you to access more equity if you meet their current investment criteria. Point does not provide this option.

Winner: Hometap for its flexibility because no one knows what might happen in the future.

Maximum investment amount

You can get up to $600,000 from Hometap, while Point has a maximum of $500,000. Hometap lets you access up to 25% of the value of your home, while Point requires that you retain at least 20% equity after they purchase their stake.

Winner: Hometap because they have more lenient guidelines regarding how much cash you can get.

Repayment models

To settle with Hometap, you repay a share of your home’s value at the time you settle. To settle with Point, you repay the amount loaned plus a share of your home’s appreciation at the time you settle.

There’s no clear winner here. The repayment models end up to be the same, even though they look different.

Transaction fees

The fees for Hometap are 3.5% plus closing costs, while Point charges 3% to 5% plus closing costs.

Winner: Hometap because its fees are lower.

Availability

Hometap is available in 15 states, while Point is available in 25 states.

Which home equity investment company should you choose?

When deciding between Hometap vs. Point, the biggest factor is the timeframe in which you need the product. Hometap must be repaid within 10 years of selling your equity, while Point provides up to 30 years. Hometap has a slightly higher maximum amount of $600,000, versus Point’s $500,000, but either will cover most homeowners' equity requests.

Hometap is best for homeowners who are looking to sell or pay off the investment within a decade. Examples of ideal homeowners could be those close to retirement or parents whose children are leaving for college.

Point offers a longer timeframe, so its product may apply to a wider variety of homeownership scenarios. The 30-year timeframe closely matches the typical mortgage term of most homebuyers. When your mortgage is paid off, you should have substantial equity in which to pay off Point and have money for retirement or your next home.

Retirees may also be interested in this product since its term may outlive them. The repayment would come out of their estate so that it doesn't affect their finances while alive.

To better understand the differences between Hometap and Point, let’s look at a homeowner with a home valued at $500,000 who wants to borrow $75,000. When they’re ready to settle their loan, the home’s value has increased to $600,000.

	Hometap	Point
Initial value of your home	$500,000	$500,000
Home’s baseline value	$500,000	$420,000
You borrow	$75,000	$75,000
You sell your home for	$600,000	$600,000
Your home appreciated by	$100,000	$180,000
You owe	$100,200	$129,000

The amount you owe to Hometap is less than Point because Hometap has you repay a share of the home’s value when you settle. In this example, you pay Hometap 16.7% of your home’s $600,000 value at settlement, which is $100,200.

With Point, you repay the amount you borrowed plus a share of the home’s appreciation. So, $75,000 (the amount you borrowed) plus 30% of $180,000 (the home’s appreciation) which is $54,000 for a total of $129,000. This is almost 29% more than Hometap in this example. Other scenarios with different borrowing and appreciation values may vary.

Other options to consider

If selling a portion of your home’s equity doesn’t feel right, there are other options. Here are a few of the most common choices:

• Downsizing. Homeowners who want to tap their equity without increasing their monthly payments may choose to downsize their homes. They can accomplish this by selling their current home and buying a smaller home or moving to a lower-cost area. This is an ideal option for retirees or parents whose children have moved out.
• Cash-out refinancing. Homeowners can refinance their homes and pull additional cash out by getting a new mortgage for an amount that’s higher than their current mortgage balance. This increases the loan amount, but payments might be the same or lower by resetting the 30-year term and locking in a lower interest rate. Speaking with a mortgage broker to show you how to get a loan through a cash-out refi could be the perfect choice for homeowners with a high interest rate mortgage.
• Taking out a HELOC. Home equity lines of credit provide renewable access to your home's equity. HELOCs act like a credit card where draws reduce your available credit and payments restore your ability to borrow again. Plus, you only pay interest on the amount borrowed. HELOCs could be a great option for homeowners who are unsure of how much they need to borrow and want the flexibility of interest-only payments.
• Using a home equity loan. A home equity loan is a one-time loan against your equity that is repaid over a specified period of time. Interest rates and monthly payments are generally fixed for the life of the loan. Home equity loans could be the best option for homeowners who want a simple monthly payment and defined payoff period.
• Taking out a reverse mortgage. A reverse mortgage helps homeowners age 62 and older access their equity. The homeowner receives payments based on their home equity and no longer needs to make mortgage payments. You repay the loan once you are no longer living in the home.

FAQs

Bottom line

Tapping into your home’s equity can help you pay down high-interest debt, make home renovations, pay for college expenses, and more. Selling a portion of your equity is a unique approach to tapping a homeowner's equity.

For many homeowners, this solution can be appealing because it offers access to equity today without requiring monthly payments. With origination fees starting at 3% and forfeiting a percentage of your home's growth in value, this financing could be an expensive option.

I recommend that before making a decision on Hometap vs. Point, compare your HELOC or home equity loan options to make the right choice. These options may be less expensive with lower upfront costs and without requiring that you share in your home's appreciation.