Settling Your Home Equity Investment with a Refinance

Whether you’re planning on settling your Hometap Investment soon or down the road, it’s important to understand all of your potential options. One of those options is to pay off the Investment with a cash-out refinance.

Before you make your decision, you’ll want to consider all of your choices for settlement. These are:

• A home sale
• A home equity loan or home equity line of credit (HELOC)
• A buyout with savings
• A refinance

Things to Consider

With a refinance, you’re taking out a new mortgage — meaning a new interest rate and new monthly payment — for which the balance is greater than your current one. You’ll receive the difference between the two mortgages in cash. To settle with a refinance, you’ll use the proceeds of the refinance to pay off your Hometap Investment.

There are a few questions to ask yourself before you decide to refinance.

• Are you primarily refinancing to secure a better interest rate on your mortgage?

You might be able to decrease your interest rate with a refinance, but it’s worth weighing the potential downsides below before you take the leap.

• Will your savings in rate change cover the fees associated with your refinance?

Keep in mind that a refinance has fees attached, and consider whether or not the lower interest rate will make up for these added costs.

• Is the new mortgage extending your mortgage timeline?

It’s important to remember that because you’re essentially taking out a new mortgage with a refinance, this route will reset your mortgage timeline.

You should also think about your timeline if you’re up against the end of your Investment’s 10-year effective period. While the settlement process typically takes about three weeks, we recommend starting the process at least 45 days before this date to give yourself ample time.

If you plan to settle at the end of the ten year term, you can find your settlement date by selecting the Settlement Calculator (more on that below).

Determine the Amount You Owe

Before moving forward with any settlement method, you’ll want to find out how much you’ll pay out to Hometap — this is also called the “Hometap Share.” The quickest way to do this is to access our Settlement Calculator through your Hometap account, which will also allow you to check on your settlement amount.

Start the Settlement Process

Once you’ve landed on a refinance as your settlement method, you can begin the process of initiating a refinance with your lender.

The next step is to contact our Investment Support team via email at homeowners@hometap.com or by calling 1 (617) 604-6985. When you contact us, make sure you have the following information:

• A good-through date for your settlement statement (we suggest at least 30 days out)
• The method of settlement — in this case, a refinance.

We’ll assess the current fair market value (FMV) of your home with the help of an automated valuation model (AVM) or in-person appraisal. Please note that in the case of an in-person appraisal you’ll be responsible for the appraisal cost, as detailed in your contract.

Next, Investment Support will reach out to you via email with your final payoff amount. This will include directions for submitting payment. You have some options to choose from here:

• A wire transfer, which can be done at a cash office or bank, allows you to send money electronically. The fast turnaround time makes this a popular choice for many homeowners.
• A certified check is written from your personal funds and — after the amount is verified — it’s guaranteed by a bank.
• A cashier’s check is also a certified form of payment, but the funds are held in escrow by the bank and they’ll issue a check.
• A money order is an option if you have a settlement amount of $1,000 or less. This secure method has a short turnaround time and won’t bounce.

After we’ve confirmed your payment, a member of our team will connect with you and file to remove the lien in your home. This process usually takes between 7 to 30 days. As a final confirmation, we’ll send you an official letter that notifies you that your Investment has been settled.

Now let's recap. Here are the steps for settling your home equity investment via a refinance:

Stay Tapped In After Settling

Even after you’ve settled your Investment, we’re here for you throughout your homeownership journey. You have free access to the Home Equity Dashboard, a digital platform where you can keep track of your home’s equity and value, calculate average renovation costs and return on investment for improvements, and get access to best-in-class home service partners.