The 10 red flags
- No cost cap. A cap limits what you can ever owe, usually as a yearly percentage of the investment. Without one, what you owe rises with your home's value without a ceiling. Unison publishes no cap: at 8% yearly growth, $100,000 on a $750,000 home would cost about $583,570 to settle at 10 years.
- A starting value below today's value. Some providers share in your home's gain above a starting value set below its appraised value. Point's published discount is 27%: on a $750,000 home, $202,500 counts as gain before your home grows at all.
- A short deadline. Hometap and Unlock must be settled within 10 years. You'll need to sell, refinance, or pay cash by then: in our example at 4% growth, about $266,444 to $296,049 in year 10, at whatever rates exist then.
- High cost if you settle early. Most of the cost lands early. In our example, settling at 3 years costs from 14.7% to 22.7% a year, depending on the provider. If there's a real chance you'll sell soon, price that in.
- Fees taken from your cash. Provider fees run from 2.99% to 4.99% of the investment, taken before you're paid, plus third-party costs. On $100,000, that's $2,990 to $4,990 you never receive but still pay for.
- An appraisal you don't control. Your share is set from an appraised value, and so is what you owe when you settle. Check who chooses the appraiser, whether you can dispute the value, and whether you can order a second appraisal.
- Broad default terms. Check what counts as a default: late property taxes, a lapse in insurance, deferred upkeep, renting the home out, or adding another loan. A default can make the full amount due.
- Limits on refinancing or new loans. Check whether you need the provider's consent to refinance your mortgage or take out a HELOC later, and what happens to the agreement if you do.
- No credit for improvements. If you renovate, part of the added value could go to the provider. Check whether the contract credits improvements you pay for, and what records you'll need.
- Unclear settlement events. Check exactly what makes the agreement due: selling, transferring the home to family, the death of the last owner, or moving out. Make sure your heirs would understand it too.
How the six providers compare
| Provider | Cost cap | Deadline | Starting value | Fee |
|---|---|---|---|---|
| Point | 18% a year | 30 years | 27% below | 3.9% |
| Hometap | 18.5% a year | 10 years | Appraised value | 4.5% |
| Unlock | 19.9% a year | 10 years | Appraised value | 4.9% |
| Unison | None published | 30 years | 5% below | 3.9% |
| Splitero | 17.99% a year | 10 to 30 years | Appraised value | 4.99% |
| CHEIFS | 12.99% or 14.99% a year | No end date | Appraised value | 2.99% |
From each provider's published terms. Your written offer can differ, so check it line by line. Tap a provider for what to check in its offer. Sources: HEI Calculator's provider terms page.
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Questions
What is the biggest red flag in an HEI contract?
For most homeowners, it's the deadline paired with early-settlement cost: if you can't sell or refinance by the settlement date, you may be forced to, and settling early costs the most per year. A missing cost cap is next, because nothing limits what you owe.
Can I negotiate an HEI offer?
Sometimes. Providers set terms after underwriting, but you can question the appraised value, ask how the share was calculated, and compare written offers from more than one provider.
Do I need a lawyer to review an HEI?
It's a good idea for the legal terms. An Offer Review from HEI Counseling covers the numbers and the fine print in plain English; we're not a law firm, and you can bring your attorney to the call.