Wealth Inside and Out

Sep 24, 2020

Adolpha Cole

Are you a homeowner approaching retirement age but see no financial way to retire? You’re not alone. Baby boomers are realizing that maintaining their lifestyle after leaving the workforce may be difficult. Equity sharing can help current homeowners finance retirement. Let’s focus on a baby boomer couple for an example.

Lisa and Tom are in their mid-60s, living in a nice suburban area near a major city. Lisa is a housewife and Tom has recently retired from a bank administrative job. Although they have lived comfortably throughout their marriage, they realize that the net worth accumulated outside the home is just a third of the wealth accumulated inside the home (equity). Their mortgage is nearly paid off and their home is now worth around $800,000. Eager to maintain their lifestyle, but to also leave an inheritance to their kids and grandkids, they are exploring options for better managing their wealth. They would qualify for a reverse mortgage and have considered home equity loans to monetize some of the equity that they have built up. But Tom doesn’t like the accruing and compounding interest on the reverse mortgage, and Lisa doesn’t want to write another mortgage check every month. They are consulting with their financial advisor on ways to create liquidity and manage their portfolio.

EquiFi is the perfect partner for them: Lisa and Tom receive 20% of the home’s current value ($160,000) in exchange for giving EFI™ Investor 30% of the value of their home when they sell, die, or prepay. They preserve the estate value, have no monthly payments and no current/accrued interest. They can also use this amount to diversify their portfolio by investing in the market or build that ADU unit in the backyard for extra income.

You see, equity sharing addresses a need that is prevalent in the market, solves a real challenge for certain demographics, and provides an alternative to traditional debt-based financing. This creates wealth inside and out.