Yes, It’s Possible To Get a No Payment Home Equity Loan, But You Have to Know Where to Look

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Homeowners across America are tapping into home equity using a new and little-known no payment home equity loan. But is it legitimate? We’ll cover how it works and a few things to watch out for.

If you’re reading this, you probably already know how tough it is to find a no payment home equity loan.

Most home equity loans are written by local banks, credit unions, or big national banks that don’t offer unique products like a no payment home equity loan.

Fortunately, a regular bank or credit union is no longer your only option. The world has advanced and new options are available. Yes, a no income home equity loan exists, but you have to know where to find it.

The No Payment Home Equity Loan

Thousands of homeowners across America are taking advantage of a new no income home equity loan called a home equity agreement, or HEA.

A home equity agreement enables you to convert home equity into cash with no monthly payments, zero interest charges, and without giving up ownership of your home. Here’s how it works:

  • Cash lump sum – You receive a large lump sum of cash based on the equity in your home. Payouts are anywhere from $30,000 to $500,000.
  • No monthly payments and zero interest charges – Unlike a traditional home equity loan or home equity line of credit (HELOC), no monthly payments are required and no interest is charged on your payout.
  • You remain the owner of your home – You remain the owner of your home, which means you’ll continue to pay your property taxes, homeowner’s insurance, and any existing mortgage payments and HOA dues (if applicable).
  • You don’t need perfect credit – You can still qualify even if your credit is less than perfect. The minimum required credit score is usually 500.
  • No income verification – There is no income verification if your credit score is at least 550. Qualify with no income, low income, or if you’re self-employed and can’t prove your income.
  • Keep your existing mortgage – You don’t have to refinance or pay off your existing mortgage.
  • Flexible occupancy requirements – Owner-occupied homes, second homes, and investment properties are eligible.

In exchange for a lump sum payout, you agree to repay the investor a percentage of the value of your home at a future date, such as when you sell the home, the last borrower passes away, or the contract term ends.

How Homeowners Use the Cash

You’re free to use the cash for pretty much whatever you like. Homeowners typically use the funds to:

  • Consolidate debt, reduce monthly expenses, & improve credit scores – Use the cash to pay off high interest credit cards, personal loans, and auto loans. Boost your credit scores and save hundreds (or thousands) of dollars per month.
  • Pay off medical, dental, and vet bills – Deductibles and out-of-pocket costs can add up to thousands (or tens of thousands) of dollars. Use the cash to wipe out burdensome medical, dental, and vet bills.
  • Home improvements and repairs – Been thinking about new windows or a new kitchen? Use the cash to pay for home improvements and repairs without adding a new payment to your monthly expenses.
  • Rainy day or emergency fund – According to Fortune, nearly 4 out of 10 Americans can’t afford a $400 financial emergency. Use the cash to protect your family from unexpected expenses such as medical bills, car repairs, or home repairs.
  • College tuition and expenses – It takes the average college graduate more than 20 years to pay off their student loans, according to Kiplinger. Use the cash to pay for college and protect your student from the financial burdens, headaches, and risks of student loans.
  • Start or expand a business – SBA and bank business loans can be slow, tedious, and difficult to get. Get the cash you need faster (and without a monthly payment) so you can focus on building your business and increasing your income.

How Much Can You Get?

The no payment home equity loan typically offers cash lump sums of between $30,000 and $500,000, depending on how much you need and how much equity you have.

Again, there are no monthly payments, no interest charges, and no income verification.

You can use the funds to pay off high interest debt, reduce monthly expenses, do home improvements, fund college tuition and expenses, etc. Use the cash for whatever you need.

A home equity agreement is a unique home equity product that offers access to your home equity without a payment and with zero interest charges.

Other Considerations

The no payment home equity loan is a legitimate product, but there are some things you’ll want to consider before signing on the dotted line:

  1. The time limit – Remember, the investor wants to get paid back at the end of the contract term. If you don’t sell your home, you’ll need to pay off the no payment home equity loan with cash and/or another loan.
  2. Closing costs – A no payment home equity loan has at least some closing costs, which can equal 3%-6% of your payout. Investors often charge origination fees along with the usual home loan fees like title, escrow, recording, appraisal, credit report, etc.
  3. Additional fees at buy out – You may have to pay additional title, reconveyance, escrow, appraisal, and administration fees when the investor processes the final buyout. Make sure you understand what fees could apply before closing.
  4. Maintain your home – If you let your home fall apart, the investor may assess a maintenance adjustment on your home value at the time of the buy out. In other words, they may increase the final value to what your home should be worth had you maintained it and figure their share based on that number.
  5. Difficulty getting a regular mortgage – You may find it difficult or impossible to get a regular mortgage without first paying off the no payment home equity loan.
  6. Default – Even though there’s no payment, it’s still possible to default. Default events include falling behind on existing mortgage payments, property taxes, homeowner’s insurance, and HOA dues (if applicable. Other defaults could include zoning restriction violations, unpermitted additions and modifications, bankruptcy, and letting the home deteriorate. If you default, you may have to reimburse the investor for various fees incurred to work out and resolve the default. If the default is serious and can’t be resolved, you could face foreclosure.
  7. Unfamiliar terms – A no payment home equity loan is different than what most homeowners are used to. Even if you’re working with a reputable company who discloses and explains everything thoroughly, it can be easy to overlook important considerations that could have a significant negative impact in the future.
  8. Not available in all states – No payment home equity loans are only available in a handful of states.

As you can see, there are some things to consider to make sure a no payment home equity loan is a good fit. As long as you uphold your end of the bargain, a no payment home equity loan could be a viable way to access home equity to pay off other debt, cover medical bills, do home improvements, or make a large purchase.

Just make sure you understand the terms and potential downsides before you sign the final agreement. You may want to enlist a trusted advisor to review the terms as well.

A Great Home Equity Option

In a “normal” world, it would be tough to find a no payment home equity loan because regular banks don’t offer them. Fortunately, a regular bank or credit union is no longer your only option.

If you’re looking for a no income home equity loan, the home equity agreement may be what you’re looking for. It enables you to convert home equity into cash with no payments and zero interest charges even if you can’t verify income and your credit is less than perfect.

You can use the funds for whatever you like, including paying off debt, home improvements, college expenses, starting a business – or anything else you can think of.

If you’d like to get a free quote, click the button below.

Frequently Asked Questions

Is it possible to get a no payment home equity loan?

Yes, it actually is – but not from a traditional bank or credit union. They don’t offer home equity loans without a monthly payment. You may want to consider a home equity agreement, which has no monthly payments and zero interest charges – even if you have less than perfect credit.

Can I take equity out of my house without paying it back?

Any time you borrow against your home equity, you’ll have to pay it back at some point. However, it’s possible to tap into home equity without a monthly payment using a home equity agreement, or HEA. If you’re over the age of 62, you may also consider a reverse mortgage, which has no monthly payments as long as you live in the home and pay your property taxes and homeowners insurance.

What is the monthly payment on $100,000 home equity loan?

Assuming a 15-year repayment term, the payment on a $100,000 home equity loan would be around $900 to $1,100 for most borrowers. For poor credit scores, the payment may be higher. If that payment is higher than you’re comfortable with, you may want to consider a little-known no payment home equity loan called a home equity agreement, or HEA.

How much would a 20,000 home equity loan cost per month?

Assuming a 15-year repayment term, the payment on a $20,000 home equity loan would be around $175 to $250 for most borrowers. For poor credit scores, the payment may be higher. If that payment is higher than you’re comfortable with, you may want to consider a little-known no payment home equity loan called a home equity agreement, or HEA.

What is the monthly payment on a $50,000 home equity line of credit?

Depending on the interest rate, the payment on a $50,000 home equity line of credit could be as much as $375 to $500. If that payment is higher than you’re comfortable with, you may want to consider a little-known no payment home equity loan called a home equity agreement, or HEA.

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About Mike Roberts

Mike Roberts is the founder of MyHECM.com, an author, and a highly experienced veteran of the mortgage industry. When he's not working, he enjoys spending time with his family, skiing, camping, traveling, or reading a good book. Roberts is the author of The Reverse Mortgage Revealed: An Industry Insider’s Guide to the Reverse Mortgage, which is available on Amazon.