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How It Works
They partner with you by providing you with a cash-payment today from 5% up to 20% of your home’s current value.
You make no payments until you sell your home. They are your partners, but you are the sole owner of your home. And like any homeowner, you can sell your home at any time you choose
When you decide to sell, you make a single payment to them from the sale proceeds. If the value of your home has increased, the payment will be more than we originally invested and they will make a profit. If the value has decreased, they will typically receive less than they invested and incur a loss. It’s that simple.
What About Reverse Mortgages?
Limited Equity-Share programs are also not a reverse mortgage. With a reverse mortgage, your home equity may decreases over time. With Limited Equity-Share, all of the equity you have in your home at the time you enter the agreement remains yours. All a Limited Equity-Share program does is convert a portion of it to cash for you.
Also, while reverse mortgages are limited to home owners 62 years old and up in their primary residence, Limited Equity-Share programs are available to home owners on primary residence, secondary homes and investment properties up to four units regardless of age. In addition, programs are available for non-owner occupied residential properties.
“These programs can be an effective way to hedge against declines in house prices. This tool provides an opportunity to preserve capital and reduce risks of home ownership without selling your house.”
Home Owner Advantages
Because Limited Equity-Share is not a loan it offers significant advantages over debt-based home finance programs.
Home equity loans or home equity lines of credit provide access to cash, but require a monthly payment, typically have a variable interest rate, and frequently have a ten-year term.
In contrast, Limited Equity-Share has no interest rate, no monthly payments, no negative amortization and no accrued interest. With Limited Equity-Share, you control the length of the term by deciding when to sell your home, subject to a maximum term of 30 years.
Who Is It Good For?
If you have significant home equity, plan to stay in your home for at least 12 months and need or want cash right now, you should consider a Limited Equity-Share program.
The cash you receive can be used for any purpose. Imagine remodeling your home,
paying off credit card or other debt, making a down payment on a vacation home or rental property, funding long term care insurance, starting a new business, taking a dream vacation, paying for college, helping a favorite charity or simply spending the money as you would like to make your life more enjoyable. It is totally up to you.
Most American homeowners have the majority of their wealth tied up in their homes. Traditional investment advice counsels against putting all of your eggs in one basket.
Limited Equity-Share programs can be a smart way to diversify your assets and give you some peace of mind.
Real Stories From Real People
What Kind of Properties Apply?
Limited Equity-Share programs are available for single-family detached homes, townhomes and certain types of condominiums. The home should be your principal residence, although some vacation properties may qualify.
In addition, West-Cal has Limited Equity-Share programs for owner or non-owner occupied residential investment properties of all kinds. Up to four units can qualify with repayment terms limited to 10 years.
What's the Catch?
There is no catch. Clients sometimes ask how we are able to offer homeowners money with no monthly payments for up to 30 years?
Unlike banks or other lenders who look for short-term profits, Limited Equity-Share investors are large pension funds and endowments that seek longer-term real estate investments.
What this means to you is immediate cash — without a payment until you decide to sell. Better yet, the cost of the money is paid for by the appreciation, if any, on your home.
Wills & Trust
Limited Equity-Share programs allow homeowners to hold title to the property in the name of trustees of a revocable inter vivos family trust if all trustees sign the agreement.
Whether you hold title to the property in trust or in your own name, if the Limited Equity-Share program is still in effect upon your (and your spouse’s) passing, your heirs are required to end it by selling the home or by repurchasing the agreement.
“This is a godsend—it has allowed me to pay down my debt and start an education fund for my daughter.”
—Client, Ron D., Daly City, CA
“ I was able to generate income by converting my home equity into cash with no debt and no monthly payments. Best of all, they allowed me to stay in the home I love.”
—Client, Bev R., Moraga, CA
“Limited Equity-Share was a wonderful tool for me to be able to have money to put back into my home without having extra payments.”
—Client, Shelly W., Seattle, WA
The Limited Equity-Share Process
The Start of the Process
At the start of the Agreement, they analyze your financial history by obtaining a credit
report and reviewing other information. If that meets their criteria, the fair market value
of your home is established by getting an appraisal from an independent, third party
appraisal firm. We call this the Original Agreed Value. The appraisal also helps determine the condition of your property. They also typically require a property
inspection to verify the condition.
You decide what their share of the future change in value will be. Their share typically
ranges from 20% to 70%. The percentage is entirely up to you and will vary from
situation to situation. The larger the percentage you wish to share, the more cash you can get from Limited Equity-Share programs.
Based on what they learn about your property and your financial history, they determine if you meet all the qualifications and, if so, how much cash they can offer you. They then present you with a written offer detailing the terms and the amount of the Limited Equity- Share payment. You carefully review the terms and conditions of the offer and decide if it is right for you.
West-Cal urges you to review the Agreement and all of the information provided with
your legal, tax, estate planning and financial advisors. If you have adult children or other heirs, we urge you to talk with them as well. We want you to be sure the Limited Equity-Share Program is right for you. If you decide to proceed, they will schedule a closing where you sign your Agreement documents, and then you receive the cash payment.
During the Process
During the term of the Agreement, you are free to use the cash payment as you wish. You make no monthly payments of any kind. Simply live in your home or vacation property as you have, pay your mortgage, taxes and insurance and maintain your home in good condition.
The End of the Process
The Agreement typically ends when you decide to sell your home or when you and your spouse both pass away. At the end of the Agreement, they will typically receive a
payment that is based on the value of your home at that time. That value, which we call the Ending Agreed Value, is typically equal to the Sale Price when you sell your home.
The change in value of your home during the term of the Agreement is equal to the
difference between the Ending Agreed Value and the Original Agreed Value. Their return on our investment is determined by the change in value of your home.
Their return on our investment can be positive or negative. If your home increases in
value during the term of the Agreement, they will make money on their investment. If your home decreases in value during the term of the Agreement, they will typically lose money on their investment. The maximum amount that they can lose is the amount of their original investment, which is the cash payment you received at the start.
Once they receive the amount payable to us at the end of the Agreement, they no longer hold an interest in your property, and the agreement ends.
In conclusion, the Limited Equity- Share program is very straight-forward. The more you know about Limited Equity- Share programs, the better you’ll be at deciding if it is right for you and your family.
We also urge you to speak with your financial advisors and family about them so they can participate in your decision. Also, we at West-Cal are available to conference with you and, your advisors and your family and to answer any questions you may have about Limited Equity-Share Programs.
Additional Features of Limited Equity-Share
The following outlines some of the additional features of Limited Equity-Share programs that you need to understand so you can make a fully informed decision.
What to do next: Call, send us an email or request a quote for more information.
We at West-Cal are available to conference with you and, your advisors and your family and to answer any questions you may have about Limited Equity-Share Programs.
There is no obligation, cost or pressure. West-Cal Reverse is committed to openness, transparency and honesty in all aspects of our business. Lets collaborate over coffee.