How Home Equity Agreements Prey on the Desperate | EP 83 | RYU Podcast

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In this episode of the Replace University podcast, host Michael Lush explores the intricacies of Home Equity Agreements, a financial product distinct from traditional home equity loans or lines of credit. Lush delves into why these agreements have become popular among companies, highlighting their profitability and potential consumer risks and drawbacks. He shares a personal experiment with a home equity agreement to demonstrate the terms, conditions, and the significant cost it can entail, especially for those with lower credit scores or in desperate financial situations, likening it to payday lending practices. Lush advises caution and thorough consideration before engaging with such agreements.
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[@jakecook2375]

Michael thanks for explaining why HE agreement is a bad way to borrow money against your home. I would assume the main target audience is a home owner who doesn't qualify for a HELOC.

[@ReplaceYourUniversity]

Not exactly, just wanted folks to understand the BIG difference between the two.

[@marissadaubenspeck9691]

​@@ReplaceYourUniversitybut if you can't get a loan any other way it can be good if you use the money for a couple high end rental properties

[@chocolatedelitesbyus]

Everyone say “when you sell” well what if you don’t sell your house in the time alotted?

[@demetrius7962]

I was told It's only off future equity, not past equity. So you would pay back the 150k plus 20% off the future equity. So if you got it at 700k and your equity then went up to 1M. That is 300k in equity, so you would owe 150k plus 60k so a total of 210k.

[@hugorojas1452]

Thank You! You may have just saved me a headache and a half.

[@ReplaceYourUniversity]

You are welcome!

[@luramen]

He did. I wish I had seen something like this years ago.

[@financialmercer1]

HEA just got scary to me.

[@macwinslow1300]

So what happens if you take the agreement for a 10 year term and pay it off in 5?

[@gregoryambrose6643]

I get the math, but I am out of options..literally OUT.

[@famdation07]

Damn the guy said the prey on desperate people. I feel for u

[@Mountainman524]

Wanna go to a job?

[@philrazzi7782]

desperate

[@GiaAlfieri-f2c]

😔Sorry, life can suck, for sure. But there may be mediocre options if we lower our standards, like: renting space to others, in your home garage or yard. Downsizing a lot, and buying or renting with several housemates. Filing bankruptcy & starting fresh, Etc.. 🍀

[@jamesmc1016]

I am desperate as well and have nothing to lose if I am dead they can have my house

[@NurseSue425]

Yes we are desperate but that interest rate is better than what we’re trying to get out from under. We only need about 6 k

[@GeorgeOrtega1]

well - if you get $150k on a 30 year loan at 6% you would end up paying $323,757 that is a interest charge of $173,757 - with risk that if you miss payment they get to foreclose - with the equity share there are no payments so there is less risk and you do get option to pay it sooner if you want - but it is true if you use the money for smart investments it could be a good move especially if you are not able to get a heloc - personal opinion of course

[@V17-c3j]

Hello brother BIG QUESTION!! What is your opinion of what happens if I get the HEA now and the value of houses drops 60%? What will happen in this HEA?

[@ReplaceYourUniversity]

If you're home value drops by 60%, you have bigger issues to focus on.

[@ChristopherR1981]

I just got a HELOC but I have liquid assets that I can use to immediately repay it all back. I saw a HEA and it definitely looked scammy to me.

[@anthonyfedorov9153]

Wow! Thank you for this information. This is mind blowing and really scary.

[@ReplaceYourUniversity]

You are so welcome

[@DrFinancialLiteracy]

Awesome information and knowledge!

[@marissadaubenspeck9691]

They have 30 year options some of them if you dont plan on selling its good for buying rental properties cash

[@omarlovejoy9086]

Excellent video

[@SergeySnovsky]

Thank you!

[@ReplaceYourUniversity]

You're welcome!

[@robertjones2820]

Thank you for the info. I have been a RYM member since 2016.

[@ReplaceYourUniversity]

Happy to have you as family.

[@christophermoya5798]

9:38 what is we have another bubble….. and market goes down?

[@ReplaceYourUniversity]

Then we have bigger issues to ponder.

[@MaryOKC]

Crazy. That’s not even a second mortgage.

[@HealthylivingwithKanikaA]

I was actually looking possibly into this because although I have very good credit I don’t have a lot of money to make payments on a HELOC in addition to my mortgage payments.

[@ReplaceYourUniversity]

We have a strategy that completely elliminates the mortgage and it substituted with a HELOC. I would have a free consultation with one of our consultants and they can make recommendations. www.ReplaceYourUniversity.com

[@respectmyignorance1011]

Hey did you ever figure it out? I’m in this situation also.

[@vgwizardx]

Thank you for this I was curious about it. But it was nothing but red flags for me. So I had to find out why this was to good to be true.

[@ReplaceYourUniversity]

Glad I could help!

[@AppleWatchTeamSports]

Thanks for the info…

[@ReplaceYourUniversity]

Any time!

[@ralphflech7515]

Wow thanks for clearing that up. That’s a horrible deal.

[@ReplaceYourUniversity]

No worries!

[@hillbillyscotsman]

Screw that

[@pyropls]

So basically an HEA is a glorified loan shark.

[@tiesaortega2251]

😳

[@carlosponchio1869]

You could get a Reverse Mortgage and really take a full bath by the lender. All ways to access home equity are scams. Some are worse than others.

[@ReplaceYourUniversity]

All ways are not scams. They all come with a cost and some are far more costly than others. Agree, HECM's are very expensive.