Foreclosure

Opting for an equity sharing arrangement with a willing investor can help you save your home. In the arrangement, the investor brings your mortgage current and continues to make monthly payments while putting the house up for sale. This way, you do not get to lose your home and at the same time you may be able to share in the future profits that may result from the sale of your house.

You may even be lucky to find an investor that allows you to continue living in the house until it sells.

The arrangement can also prompt you to vacate the house so the investor can rent it out. In such an arrangement, the investor must agree to share part of the rental income and future profits resulting from the house sale as per the equity shares. He must also share any appreciation that the house might have gained by that time. Normally, a certain percentage is set, and the investor will less the costs he incurs such as the cost of bringing the property current, property taxes, repair costs, mortgage payments, and management costs if any.

The equity sharing arrangement plan allows you time to put your finances back in order. At some time in the future, you may be able to accumulate enough equity to buy out the investor at a set price. This will enable you to keep your home at the end of it all.

Equity sharing is fast gaining track in the world of real estate as one of the best ways for home buyers to become homeowners without having to make the hefty down payments required by sellers. In equity sharing, two or more parties come together and agree to have an ownership interest on the home on sale, hence the term “equity sharing.” Typically, one or more of the parties, referred to as the “investor,” makes some or all the home’s down payment. The other party, commonly referred to as the “occupier,” lives in the home and pays all the related home monthly expenses such as property taxes and mortgage payments.

An equity sharing home arrangement benefits both the parties with equity to the house because for one, the investor gets an investment with substantial growth potential, and this is secured by real estate. On the other hand, the occupier can now be able to purchase a home that they would have otherwise not been able to afford since they lacked the required down payment. Because honestly, even if a buyer has a good income and can make hefty mortgage payments, it is hard to save up for a whooping 10 to 20 percent down payment, when starter houses nowadays are going for $600,000 or more.

Furthermore, both parties share in the property’s appreciation and if indeed the equity sharing agreement is done properly, it can provide significant tax benefits to both parties.