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Introducing the EFI™

What is an EFI™?

 

An EFI™ is a new type of home financing product which, unlike a mortgage, has no monthly interest payments nor pre-established duration. Instead of having to pay interest each month, the EFI cost to the consumer is based on your home's future value. With mortgages and loans, you borrow money from a lender who receives interest in return for lending you the money to purchase or improve your home. With an EFI, there isn't a lender, but rather an investor, who is entitled to a portion of the value of your home when you sell the home, decide to prepay, or pass away.

  • For a new homeowner, an EFI can lower your monthly payment, because part of the purchase price is financed through the EFI co-investment, instead of a mortgage only.

  • For an existing homeowner, an EFI* allows you to access liquidity currently immobilized in your home. This allows you to refinance your home, diversify your assets, or create a guaranteed income stream in retirement, a huge problem facing the majority of Baby Boomers in the United States

Like any other financing tools, an EFI is an obligation that must be paid back. But unlike other forms of financing, there are no periodic payments, and no risk of losing your home.

Instead, the EFI is only repaid when you sell your home, upon the death of the homeowner, or if you choose to pre-pay. At that time, the investor receives, as payment, a portion of the sale price of the home. If the home price has increased, the investor will share in the appreciation of the home. If the home price has gone down, the investor may absorb a share of the loss.

Most importantly:

  • An EFI is not a sale of your home

  • The investor does not share ownership in your home

  • The EFI is tax neutral**

* The amount the homeowner may access with an EFI is based on the mortgage loan, your credit profile and other factors determined by the investor such as expected home price appreciation.

** EquiFi encourages you to seek professional tax counsel before entering into an EFI agreement.

How Can I Use an EFI™?

 

Like many Americans, you may find that you can't quite afford to buy the home you want because the monthly payments are too high. Still others who already own their home may find themselves with most of their personal wealth locked-up in the home and without sufficient liquid assets to help save for life’s major expenses such as college for kids and retirement.

An EFI allows you to reduce your monthly mortgage payments and/or better manage the equity you have in your home. You can use an EFI in any of these ways:

  • Buying a home -Reduce your mortgage payment

  • Paying off your mortgage - Use equity to retire some or all of your mortgage payments

  • Reduce your kids' student loan balance

  • Pay off your 2nd mortgage or home equity line - That interest may now be taxable.

  • Saving for the future - Diversify your investments by converting some of your equity to other investments

  • Securing your retirement - Convert home equity into lifetime income for retirement

Why Should I Get an EFI™?

 

Here are some reasons for considering an EFI.

If you are a home buyer and:

  • You can't afford to buy a home because even with the down payment you can't manage the monthly payments.

    • With the EFI, an investor matches your down payment thereby reducing the amount that you need to finance and lower your monthly payments

  • You can afford to buy a home, but not your ideal home.

    • With the EFI, you can buy a better suited home for the same monthly payment you would be making on a less expensive home

If you are a home owner and:

  • You want to fund your children's college education through a 529 Plan, but you can't afford to divert your much-needed income into savings.

    • With the EFI, you can take a small percentage of your current home value and apply that towards funding a 529 College Savings Plan

  • You need to use your home as a means of creating a lifetime income and want an alternative to a reverse mortgage.

    • An EFI can be used to create income without high cost and limited flexibility of the reverse mortgage. A reverse mortgage is actually adding debt because you are borrowing money from the bank or lender and then accruing that interest on a compounded basis. The EFI is an agreement between you and an investor. It is not a loan, has no current or accrued interest rate, and the EFI investor shares in both a portion of the upside of home appreciation and may even lose money in the event of significant home price devaluation.