Cash Out Refinance vs Equity Share | Which Is Better For Homeowners?

[@NorCalDodgers]

What is a person to do when they cant qualify for a heloc or home equity loan? Has 300k+ in equity. Has reached a hardship and is paying bills using credit cards in turn lowering their fico score. How else is that person able to access some equity? They don't wanna refi into a higher rate that they probably won't qualify for anyway and attempting to do so kills their credit even more. ??? What options do we have?

[@raquelj2002]

@scotttheman My sentiments exactly, the banks need to counter these agreements with a loan product that will work for anyone, even if it will pay-off debt only and give homeowners the chance to get back to normal. We are still post covid and the rules of yesterday need to change.

[@pedrotinaco1]

Same situation here. We're both 59, wanting to retire, loads of debt, hanging on 655 score, 490k home value, 20y into mortgage, offered 75k

[@eulajohnson3247]

I'm in the same boat and the sharks are circling at the courthouse. So this did sound like a good option to make all this go away, but I'm not so sure at this point what to do. Allow the sharks to get judgments against the property, they will take the equity anyway. Just Hopeless.

[@BlackBizAdvocate]

Have you thought of a reverse mortgage?

[@karmasutra4774]

Roommates or short term nursing rentals for a couple of years and you can pay it that way

[@CinnaBunzz]

Okay so question what’s the difference in this and getting a regular home equity at a 10.5%. Just to give you figures let’s say you take $60k out for 15 years at a 10.5% that’s a total repayment amount of $119,383.20 minus the original $60k. The bank makes a profit of $59,383.20. You end up paying almost double essentially.

[@conservativevet2240]

Thats exactly what I was thinking

[@LivingGoodinSolanoCounty]

this is a fact. Hes not looking at apples to apples. Do a side by side comparision of what they would pay with a second loan versus this option or others like it

[@universaleezytv4274]

Great observation! Why no response to a great question? Please answer this great thought!

[@mathieuk119]

You're paying 60k out over 15 years. His example paid out 60k in interest over like 3 years. Add another 12 years of appreciation in the property and you're cooking

[@MrCashgold]

​@@LivingGoodinSolanoCountyTrue, and if you did 90% of real life scenarios would end up worse than the example given. A select and very few narrow situations would this ever make since. Believe me on this one.

[@matthewgilliard4978]

Omg. I had No Idea this was happening, I have a nice size of Equity in my property ( Multi Family ), after watching your video, I will be more cautious. Thank You.

[@candacepeterson23]

This video helped me IMMENSELY. I am trying to find the best option to buy my husband out but I don't want to loose my 4% rate. I considered this option until I watched your video. Thank you!!

[@MattTheMortgageGuy]

You’re welcome! Hopefully you can find an equity line or something else to get him bought out

[@b_marvel_ous]

Just did some research on these and came across your vid, thanks for the heads up. 👍🏾

[@MattTheMortgageGuy]

Glad I could help

[@Brian-rs4ug]

Right On! Matt Thank you for sharing this video. People are looking for a quick fix and don’t think thru what they are doing when it comes to pulling money out of their property. You can be assured a bank is looking out for their best interest. Not yours. Unfortunately, many people can easily be mislead, especially when they have their eyes on what they can do with the borrowed money. (Home improvements, motorhome, vacations and the like) This is as bad an idea or worse than a reverse mortgage.

[@MattTheMortgageGuy]

You are exactly right. People want a quick fix and can be financially gullible.

[@jeanlaventurejr4988]

My understanding is that rental is calculated differently due to the expected income generation, can you do a video putting a primary instead of a rental to see if it will compute differently?

[@chandawoods564]

Matt, what's the best way to access equity in a home with a credit score ranging 600 to 630?

[@MattTheMortgageGuy]

Depends on a number of factors. What is current mortgage look like? How much equity are you looking to access and why? With that score not tons of options but you’d want to talk it through with a good mortgage advisor. Start here: greatmortgagebroker.com

[@onestunningdude9445]

Best thing to do probably is call the credit cards first and see if they will lower the interest rate. Second is to get a better job or 2nd job. Then if all fails refi into a higher loan. Unfortunately,I been seeing articles saying by 2040 you will own nothing and be happy. I can see USA being like that now.

[@karmasutra4774]

I was curious about HomeTap for my roof, AC and water heater that all need to be done now. I was hoping not to dip into my cash yet since I have equity too, but watching videos on it to see if they screw you when it comes to liens or the money you end up owing them I am semi retired and living off money I already have so trying to be creative .. thinking maybe put it on O% no interest for 18 months and use cash from my interest earnings towards the minimums the credit cards want that count towards the principal and fees.. Not sure what else to do .. since I have no job can't go for a loan or equity line either

[@lourdessumilang1974]

They are Real Predators!!! Thank you for analyzing the sample you showed us. I clearly understood this company's scheme. Thank you.

[@MattTheMortgageGuy]

My pleasure!

[@wendymartinez3948]

Thank you for the info? Which option is better a heloc or equity loan

[@jcm730]

Matt, Do any refi lenders do drive-by appraisals vs. full interior appraisals currently? I'm looking for a cash out refi (great credit and LTV) but I don't want an interior appraisal

[@MattTheMortgageGuy]

Conventional lenders will do a full appraisal. Drive by or AVM more common with HELOC or equity share type products

[@AronPeters]

The final percentage is determined by the appraisal.

[@GauchoDon]

Because of the leverage and the starting point, it only makes sense if you expect values to be near flat or down. Does it say what happens if values drop? Say the value actually went down to 472, do you just need to pay them the 60 and you got free money? (would be better just selling in that instance, I think).

[@ws2940]

I was wondering what happened in that same case. What happens in this scenario if your home value drops?

[@karmasutra4774]

@@ws2940they probably penalize you for that and you still pay the difference somehow

[@martainroth2588]

how old are these companies? Has anyone had to sell because they reached the 30 years?

[@Convert96]

Hi Matt, I would love it if you could do a segment about reverse mortgages. Or have you done one already? I have friends who are dealing with their mom’s reverse mortgage. I’m concerned that when she passes, they will loose the house. I wish we knew more about how to get out of these and why people should avoid them.

[@MattTheMortgageGuy]

I don’t think they are all bad. I’ll try and get a reverse expert on my livestream

[@karmasutra4774]

I don't have kids so for someone like me a reverse mortgage at a later date will work for me as I get older. Think it depends on your situation for sure

[@Karen-ly7oh]

We own our house outright. Have no plans on moving. Ever. So would doing this mean we get the equity now and for whoever inherits our house just gets less after it's sold?

[@MattTheMortgageGuy]

Exactly- you could do the same thing with a cash out refi and likely leave more.

[@joerhode2126]

I agree with your overall assessment of these types of loans but what do you do if you find yourself in a situation like me where I have a complicated medical issue that is keeping me from working and so I don't qualify for HELOC, Home Equity Loan, or even a Cash Out Refinance. I've seen dozens of doctors about my condition, even had a major surgery which didn't fix the problem and been out of work for almost 3 years now. I've used up almost all of my savings (mortgage payments, bills, living expenses, medical bills, etc) and close to being completely out of cash and living on credit cards. The only assets I have are my gun collection (which I'm in the process of liquidating) and the equity in my home (about $250K). So what am I supposed to do? I only have bad options to choose from including one of these terrible agreements until my medical situation gets resolved or I get approved for disability.

[@sassygrace9762]

Reverse mortgage?

[@traveloasis8389]

@@sassygrace9762 You still need income to qualify

[@brendahenderson683]

I thought there were laws against usuary.

[@traceycanady9083]

What if you never sell your house?? Can they force you to sell after so many years ??

[@karmasutra4774]

HomeTap says 10 years. I was wondering what happens if they go out of business before your 10 years.. then what? Liens and bankruptcy courts would be a nightmare if they had a lien on your home

[@joseantoniovillegassesma5107]

Hi Matt!! I already have a heloc, but I used alll the money already ,to pay for expensive credit cards etc. Looks like I dont have other option, since I dont make much money to pay for any other loans. I have 600k equity in my house, they offer me 130k. That I will use for paying my heloc (70k), plus other loan (25k). Paying for those 2 loans my whole monthly payments are going to be reduced from 5k to 3k. I am 63, already retired living with 5k a month. So I am rich equity, but poor cash. Any ideas?

[@sassygrace9762]

Reverse mortgage?

[@doandbebettereveryday202]

Is selling equity a taxable event?

[@MattTheMortgageGuy]

Not in this case. It’s not technically sold.

[@mathieuk119]

This would be a really competitive product at about half this rate. Slight premium over a heloc. This is example is too expensive

[@MattTheMortgageGuy]

Agreed

[@briank.patterson5146]

This a hard money loan that will eventually be very painful. Not a loan but when its all said in done it comes to the same painful results. Don't hurt me now! Hurt me later! Thanks for your insight Matt. 👍

[@MattTheMortgageGuy]

Thanks for watching!

[@genrevfilm]

Which is worse? Bankruptcy or one of these creepy loans?

[@MattTheMortgageGuy]

Probably one of these loans. In BK your home and home equity is protected.

[@ws2940]

Thank you for the video Matt. Yeah I'm wondering in what scenario that this sort of loan would make sense. The only way I can see if that if you are dead flat broke. Have nowhere else to go for money and this looks quick and easy. I'm guessing faster than getting a HELOC? But yeah they definitely are going to want their pound of flesh for this sort of loan.

[@davidrasmussen5537]

Thank You!

[@MattTheMortgageGuy]

You're welcome!

[@jameswood7500]

Thinking about selling to buold on another property. But this might be better i coild get cash build the new place and start renting this place and if the market ever crashes i could sell then basically getting the loan for free.

[@MattTheMortgageGuy]

nothing is free. "if the market ever crashes" is a bad bet. Going back to 1944 there is only ONE year where you can buy and hold for 10 years with negative appreciation (2006 for anyone curious)

[@spoiledgoofy]

What if you get 100,000 and do a 10yr. So that means you have to pay it back in 10 yrs or when you sell your home? what if you borrow the 100,000 and are able to pay it back in 6 yrs. Can you pay it back then early payback? and will there be a penalty, can they still be after your home when you sell it say in 30 or so yrs? Or once you pay it back you walk away free and clear. And what would be the cost of paying back in the 6yrs borrowing 100,000

[@sajis3985]

Hi. Iam planing to take cash out ,, is this good idea right now.?? I brought my home 250k last year ,,Down pay 3%,,Now home value around 400k. How much money I can take out ?? Thanks

[@MattTheMortgageGuy]

the better question is WHY do you need cash out? To run some scenarios and get good advice go to www.greatmortgagebroker.com/

[@jameswood7500]

I'm thinking of doing this to build on another property I own in turn making. This home a rental in wich the renters will pay off the mortgage and if they do 30 years I'll be dead when it sells anyway and my kids will get whatever left currently own 4 properties with a mortgage on 1.

[@andrechartier4002]

Matt, I found your video very interesting, but I think that you may have missed a fairly major factor. Your are ignoring the work you can do with the money that would be required to be paid back as monthly payments. In your example, you were offered $61000. if you were to have taken a home equity loan over 10 years at an 8% interest rate your payments would be about $740 per month. in your example the appreciation occurred over 3 years. 3 yrs of $ 740 is about $27k. It I use that $ 27k to pay off credit cards I will be better off by about $40k based on the reduction in overall interest. As a result I do not think the fee that they Charged was as outrageous as you made it sound. I think that you are likely way smarter then I am on this matter so I would be grateful if you could tell me what I have got wrong. i

[@beckyh8565]

Matt, any suggestions for fighting a predatory loan company? something with teeth? CFPB is useless.

[@MattTheMortgageGuy]

try and find a real estate attorney

[@onestunningdude9445]

If you have a 620 or lower credit score the best thing to do probably is call the credit cards first and see if they will lower the interest rate. Second is to get a better job or 2nd job. Then if all fails refi into a higher loan. Unfortunately,I been seeing articles saying by 2040 you will own nothing and be happy. I can see USA being like that now.

[@Healthandwellnessbeyond120]

Your not correct as Point company does a home appraisal and it’s based off that actual value so it is only the 33.8 % for the example you are using. You would pay back around 75-80K back to point not over 100k. I called them and asked them the detailed questions to be sure their wasn’t any smoke and mirrors to it.

[@MattTheMortgageGuy]

Glad you did your research. Not all of these companies are the same as far as structure goes. Good to understand it and remember they aren’t non profits, they are in it to make 💰

[@joecomstock3936]

I am about to make this agreement with unlock YOLO

[@MattTheMortgageGuy]

Careful please!

[@joecomstock3936]

@@MattTheMortgageGuy unlock ended up dropping the agreement because my home is an A-frame.

[@MattTheMortgageGuy]

@@joecomstock3936 you lucked out! Don’t give up your equity!

[@karmasutra4774]

You YOLO'd your way out of a bad deal . Someone is out there looking out for you ❤

[@mr1asvegas784]

So what's the answer? Everyone that talks about his issue never gives you the answer to the problem if you don't qualify for the HELOC or the interest rates are too high. Why should credit score even matter when a person wants to take equity out of their own home?

[@rukiddingmeNJ]

If these equity share companies calm down with the equity percentage gouging and undervaluation of the property, it would be an excellent solution! Otherwise, people with bad credit and plenty of home equity don’t have any other options. Frustrating

[@homenmoney2024]

Why don't you call banks pedatory for charging 24%+ on credit card debts ? Are you a lobbying for bank because you are paid by the banks ?

[@MattTheMortgageGuy]

1. Not paid by the banks 2. Agree that credit cards are terrible Cheers!

[@republic1843]

Getting a cashout in texas requires a minimum of 580-620 credit score, other states require a 500. Texas housing laws SUCK!

[@MattTheMortgageGuy]

I also just ran into the A6 loan rule, where if you do a cash out refi in Texas you can’t do another loan for 12 months

[@travisnelson8921]

I think Matt is narrow minded. There are no other options for folks who doesnt meet the banks criteria but maybe this makes sense. I have 400000 equity in my home but im a small, small business owner and banks wont do anything because of my DTI. I have zero 30 day lates. Excellent payment history on all my debt. Etc. I would love to take my.equity and buy a small investment property.

[@MattTheMortgageGuy]

Call me wherever you want. I’ve sat on the phone with buyers crying to me after they realize these “equity share” companies have stripped hundreds of thousands of equity from them .., I’m not a fan and will do what I can to protect consumers

[@BlackKettleRanch]

If they weren't so predatory, they could do more volume and probably make more money without hurting people. What is the matter with their logic?

[@fxdnny]

Such a scam! Thanks for sharing Matt.

[@MattTheMortgageGuy]

I'm here for the people!

[@Jay-pf2cn]

Folks work hard to reach ownership status, then give it away. I can’t understand it.