There is a new loan program out there that allows you to get cash out of your home. The catch: you trade away a piece of your home’s future appreciation for cash now. Unlike traditional reverse mortgages, they are not structured like loans, the fees are lower and there’s usually not an age restriction. The program is called a Rex Agreement. Here are some guidelines…
– You can get $71,000 on a $500,000 home if you agree to split future changes in value 50-50 with Rex & Co.
– You have to stay in your home for at least 5 years. If you want out sooner, penalties run as high as 25% of the original sum you received.
– If you value of your home goes up to $600,000, you’ll owe Rex $121,000 when you sell. That’s the original $71,000 plus $50,000 for half the appreciation.
– If the value falls to $400,000, you’ll pay $21,000; that’s the original amount minus half the depreciation.
– Closing costs run as high as $4,000.
Be VERY careful about programs like this. If everything went perfectly, and what does, it may be worthwhile. If you’re going to consider a program like this, please make sure that a professional (myself or Paul Barton) looks at your unique situation to ensure it’s a good fit.