New offering combines benefits of home equity sharing options with a traditional mortgage
Non-agency lender Newfi Lending has launched EquityChoice, a shared home equity mortgage offering that allows homeowners to access their housing wealth while introducing a new asset class for investors.
The introduction of the new product comes at a time when homeowners collectively hold over $28 trillion in housing wealth. Despite this, persistently high-interest rates have made many hesitant to tap into their home equity using conventional means.
The company said EquityChoice addresses this issue by offering homeowners immediate access to capital at a below-market fixed interest rate while sharing a portion of their home’s future appreciation.
“Newfi has created a groundbreaking new offering that meets homeowner needs for liquidity by combining the benefits of home equity sharing options, such as no monthly payments, with a traditional mortgage,” Newfi CEO Steve Abreu said in a media release. “Our goal is to simplify the mortgage process in ways that give financial control back to homeowners.”
EquityChoice is also designed to be advantageous for investors. It is REMIC-eligible, making it an appealing option for broad market acceptance in the coming years. Additionally, Newfi’s channel partners and service vendors will have the opportunity to generate revenue from this new product.
Key benefits for homeowners using EquityChoice include access to their home equity at a below-market fixed-interest rate, the ability to retain their original low-interest primary loans, immediate access to capital without affecting monthly cash flow, and standard mortgage loan terms with built-in safeguards.
Pat Doyle, president of Newfi Investment Group and co-creator of EquityChoice, commented on the launch: “Homeowners’ needs have evolved over the past 30 years, but the mortgage industry has not offered new solutions since 1991. We’re excited to deliver an innovative new solution that gives homeowners a smarter and safer way to manage their overall wealth while creating an alternative way for investors to gain exposure to the housing sector.”
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